As we trudge through snowdrifts or gaze out at bleak, rain-soaked streets, spring can seem a long time away. But, we have great news: It will be here before you know it. And as daffodils start popping up, so will the “For Sale” signs, as the spring home-buying season begins.
If your 2019 New Year’s resolution is to buy a new home, now is the time to start getting your ducks in a row. Just think, if you prepare now, when the holidays roll around next year, you’ll be entertaining in the home of your dreams.
Burnish Your Credit
Did you know that your credit score has a direct impact on how much you will pay for a home? That’s because lenders reserve the best rates for borrowers with pristine credit. Their credit gives lenders confidence that they will repay the loan. If your credit isn’t as high as you’d like, now is the time to address that. Doing these three simple things can make a big difference:
- Make sure there are no errors on your credit report. Mistakes are more common than you would think— a quarter of Americans have found an error on their report, according to the Federal Trade Commission. If you find one, fix it.
- Assess your credit Some consumers assume that it’s better to have fewer credit cards, but actually, credit longevity is one of the factors that makes up your credit score, so you might be hurting yourself if you close an old card. What’s more important is your credit utilization — that is, how much of your available credit you are using each month. Aim for just under 30% of your limit.
- Pay your bills on time. Every time. No excuses. Late fees can cripple your credit score, so set your bills on automatic payment to make sure you never miss a due date again.
Choose a Lender
Getting your financing lined up in advance allows you to set a reasonable budget and shows potential sellers that you are a serious buyer, which makes the homebuying process far easier once you hone in on the house you want and make an offer. But choosing a mortgage lender can be a challenging process if you don’t know what to look for.
Rates should be just one consideration. You also want to look for a lender who has excellent customer service and a wide variety of programs so you can find one tailored to your financial needs. After all, a home is probably the largest purchase you’ll ever make, so you want to work with a mortgage lender who puts you first.
Secure a Mortgage Preapproval
By working with a mortgage lender so early in the process, you can get preapproved for your loan before you even start house hunting. With a preapproval in hand, you can be confident of the exact amount your lender will offer you (assuming nothing major changes in your financial life). This helps you zone in on houses in your budget and lets sellers know that the transaction will be worry-free on their end.
Getting a mortgage preapproval involves extra paperwork, but the great news is that when you do find a home you want, you can concentrate on more exciting things, like what flowers you’re going to plant in the yard or how you’re going to redo the bedroom.
Create a Solid Budget
Once you have your mortgage preapproval, you’ll have a good idea of how much your monthly payment will be. But if you’re a new homeowner, you might be surprised to find out that’s just one piece of the cost of owning a home. You’ll also have taxes, insurance, ongoing maintenance costs and sometimes, homeowners association dues.
A budget can help you create a realistic picture of how much it will cost to own your house, not just buy it. It’s also wise to start a fund for big-ticket items such as major repairs or replacements that may come up. An emergency fund gives you the peace of mind that you won’t go into debt when an unexpected bill comes your way. Consider all of these factors to create a realistic budget that will help you see how much money is already spoken for each month … and whether that new living room furniture might need to wait.
Make a List of Home Wants and Needs
Sure, it’s fun to just jump online and start looking at homes, but you’re going to become overwhelmed … and, quite possibly, sidetracked by the bells and whistles you’ll see as you browse. Yes, that bedroom fireplace is awesome, but no, it’s probably not a priority.
First, you’ll want to start with home necessities, such as how many bathrooms and bedrooms you need; what school district is important to you, and whether the home needs to be close to public transportation and amenities.
Then, move on to the wants, taking into consideration your lifestyle and what’s really important to you — whether it’s a kitchen made for entertaining, a spacious backyard that will accommodate a swing set, or an office so you can finally write that amazing novel. When you have a clear picture of your priorities, it’s easier to pass up that six-car garage that’s appealing but not really necessary.
Interview Real Estate Agents
House hunting can quickly become a daunting task, so it’s helpful to have someone by your side who has your best interests at heart to help you at the negotiating table and keep you focused as you look at houses.
It’s worth taking the time to interview several agents before choosing one. Find out about their experience in the areas were you’re looking — some well-connected agents may even be able to help you find homes before they hit the market — as well as their experience with a buyer like you.
You’ll also want someone who is compatible personality-wise; you’ll be spending a lot of time with this person — sometimes under stressful conditions, so don’t underestimate the importance of having someone you get along with. Communication styles matter, too — does the agent prefer to call, text or email, and how often? Setting expectations up-front can go a long way in a positive relationship.
Start Visiting Homes
And now — finally — comes the fun part. Once you have all the building blocks lined up, you’ll be ready to visit homes that are in your price range and include most of your necessities and many of your wants. Put together a list of open houses and stop by to see what’s on the market.
Even if you’re not quite ready to commit, the more houses you see, the better grip you’ll get on your own style and the types of amenities that should be standard in your price range. If you’ve kissed a lot of frogs, you’ll recognize a prince immediately and be ready to leap.
Ready to get the process going? Contact us today for a free mortgage quote and more information on how to kick off the homebuying process.
If so, subscribe now for tips on home, money, and life delivered straight to your inbox.