1. Decide how much home you can afford
It’s tax time, so you should have some idea of what your gross income is. The general rule of thumb is multiply your yearly gross by 3 to determine a ballpark estimate of what homes would be in your price range (this doesn’t take into consideration a lot of the other factors, such as debt.)
2. Develop a wish list of MUST haves and WANTS and know the difference. A special needs child or an aging parent may mean handicapped accessibility is a must; affordability/low fuel might be a must. Appliances should NOT be a deal breaker if a house suits your “must”. This can help you from buying that great house with a sauna but insane fuel and electric bills.
3. Location location. This is where you will LIVE. If you don’t like the neighbors, don’t buy the house.
4. Cash on hand. You need to have SOME money, even with the incredible loan programs that most rural residents have access to. Remember, the lower your downpayment, the higher the loan amount you’ll need to qualify for, and if you still qualify, the higher your monthly payment. Your downpayment size can also influence your interest rate and the type of loan you can get.
5. More cash on hand…. Your REALTOR® can tell you what other costs buyers commonly pay in your area, including transfer fees of 2% to 7% of the home price. Tally up the extras you’ll also want to buy after you move-in, such as window coverings and appliances.
6. Know your credit score…. Most lenders require a minimum credit score of 620 for a home mortgage.
If your score is low we can give you some free advice on how to improve your score, but the tried and true method is to pay down your outstanding bills and make all payments on time.
7. PreQualify with a lender!!!! I’ve seen so many folks miss out on that ‘great new listing’ because they waited to see the perfect house before talking to a lender. While they were doing the intial prequal with their lender, the prepared folks bought the house!
Start gathering the paperwork your lender says it needs. Most want to see W-2 forms verifying your employment and income, copies of pay stubs, and two to four months of banking statements.
If you’re self-employed, you’ll need your current profit and loss statement, a current balance sheet, and personal and business income tax returns for the previous two years.
Call me if you have any questions! 907-304-2871