What to do before buying a home.
Hello, lovelies! I’m sure you have found your way to my blog because you are looking to buy a house! Well I have good news for you. My husband and I are doing the same, and I am going to share every step of the way with you! We have been renting for much too long and are finally ready to have a place on our own. But like other first-time home buyers, we have absolutely no idea wtf we are doing. A home is arguably the biggest investment we will ever make so we want to make sure we are well educated through every step of the process.
There is so much that goes into home buying and I’m going to be sharing it all with you. We are in the very beginning stages (we don’t even have a realtor yet) so this is literally going to be a step by step blog series. We are looking to move a year from now, so be sure to check back for more posts in this series. I’ll write new post every time something new happens! But for now, I want to go over what to do before buying a house.
I am a serious planner and I would never go into something (especially something as important as this) without reading every book, blog post, watching every video, talking to every person, basically gathering every bit of information that I possibly can. So, this post will go into detail all the prep work that needs to be done before you are ready to buy.
Start planning one year out.
I strongly suggest that you give yourself one year before you start actively searching with a realtor. It may seem like a long time, but sometimes there are a lot of things that need to be done before applying for a mortgage, especially if you are a first-time home buyer like us, you want to use that time to do tons of research. Reach out to your friends who are homeowners and ask them if they think there is anything you should know. If there is anything they would do differently during the process. You might also need time to save up some money or repair your credit. A year is a healthy amount of time to prep for all of these things.
Get a binder
During this process you will accumulate SO much paperwork. Everyone you meet up will have something to give you and you will have to keep track of your own paperwork and documents yourself. You will also need a safe place to keep all of your contacts and resources, contracts, and receipts in the future as well as a place to store printouts of all of the listings that you are interested in. Binders are the best way to keep organized throughout this entire process.
Check your credit score
This is possibly the most important tip besides saving money. Credit is everything when it comes to making any kind of big purchase. The higher your credit score, the better interest rate you will get and the more the bank will trust you with a loan. I spoke with my bank a couple weeks ago and asked her what your credit has to look like in order to get a home loan and this is what she said.
Credit Score of at least 640, 700 for the type of loan we are getting and for certain loans you can get by with a 620 but you really want to be at least in the middle-upper 600’s
All derogatory marks, aka collections accounts need to show a zero balance on your credit report. Having collections accounts is something that lots of people struggle with, and banks understand that however they will not give you a mortgage until you pay all of those down to zero.
Keep in mind sometimes when you pay a collections account it can drop your credit score a couple of points, it is normal and my mortgage lender said that your credit looks best 6 months after handling collections accounts. If you show 6 months of good credit, your score really reflects that. This is another reason why you should start prepping a year out, because your score takes months to reflect good money management.
You shouldn’t have 30-day late payments on your credit report either. Make sure you are paying your bills on time. Banks like to see that you can pay the bills that you already have before they give you more money.
Save money
While there are programs that allow you to purchase a house without any money down, there is no reason why you should save as much money as you possibly can before you decide to begin the home buying process. There are so many costs related to purchasing a home and there are even more costs associated with moving.
You never want to be moving and have absolutely no other money. In fact, our bank said that in order to get a loan for a home, we had to have several months of expenses in the bank and they had to be sitting there for a healthy amount of time. This shows the bank that we are able to save money and keep it for a long time. Not all loans require this, but at the very least, you should have about $10,000 set aside for closing costs, or anything else you might need.
We’ve looked at homes that didn’t come with a washer/dryer, homes that needed a few tiny things here and there. If you are moving from a condo/apartment to a home you will need things like a lawn mower, etc. So having money set aside for these things is important so that you don’t have to use a credit card to purchase them.
Be open to everything
I can’t stress this enough. Before I started talking to people about buying a home, I was very set in my ways. I wanted a brand new house that nobody had ever lived in before, I wanted it to look a certain way and basically I wanted my dream house to be waiting for me when I was ready for it.
There are a couple of problems with these unrealistic expectations, but the biggest problem was money. You see, new construction houses where I am usually cost a lot more money than houses that are a bit older. And even though I might not find the perfect home for me, after talking to a realtor, she assured me that I could always renovate my home to be exactly how I want it. You should always keep in mind the potential that your home has for the future instead of only focusing on the now.
Understand that no matter the house, you should always be living below your means.
If you are at all familiar with my blog, you might already know that I have a finance series that is aimed towards getting rich AF. Our ultimate goal in life is to be financially free, have money in many different places, and pay our house off early so we won’t be in debt for the rest of our lives. In order to achieve this, we probably won’t be able to get the house of our dreams right away. We saw tons of houses that were stunning that we could afford. But we don’t want to afford. We want to thrive.We don’t want to have a house and nothing else. Because of this, we have come to the conclusion that we will probably have to make some sacrifices and that’s okay with me.
Last but not least, Make a mood board.
And this is where Pinterest comes in. Pinterest has SO much inspiration and you can essentially get a complete feel of exactly what you want in a home. I have created an entire board with sections for our home and I can’t wait to turn this dream into a reality!
Have you you purchased a home? I’d love to hear your opinion on this! Leave me some feedback in the comments below!
