To-Do List for Homebuyers
When considering purchasing a new home, gathering all the information you need is key. There are expenses that will incur, so saving ahead of time will lessen the burden when it’s time to purchase. Here are a few items to consider:
Escrow for Insurance and Taxes
A credit score is a measurement of your creditworthiness. Your score is based on your credit history and can greatly influence the terms under which you can borrow money, including in the form of a loan to purchase a home. It’s a good idea to start monitoring your score ahead of time and understand where you need to be and how to get there if you aren’t quite there. Here are a few helpful ideas to maintain a healthy score:
Limit large purchases
Keep up-to-date on bills and payments
Keep credit usage low
Don’t cancel credit cards
Higher score equates to mortgages with lower interest rates
It's important to know how much home you can afford before you start the house-hunting and mortgage approval processes. Doing so can help limit your search to realistic options and help you avoid disappointment when you find a house and then apply for financing.
Figure out your monthly debts
Know the debt-to-income ratio your lender will require
Figure annual income, divide it by 12, and then multiply by your lender's back-end ratio. Subtract your monthly debts from this amount to determine your maximum monthly mortgage payment under the back-end ratio
As a potential buyer, you benefit in several ways by consulting with a lender and obtaining a pre-approval letter before you search for homes. This means the lender has checked your credit and verified your documentation to approve a specific loan amount. Consult with your lender to see exactly what they will all need so you can be better prepared to begin. Here are the main items they will need:
Proof of Income
Proof of Assets
5. HOME WANTS AND NEED
If you are at this point, congratulations! You are one step closer to homeownership. Once the hard work of getting here is done, it’s time for you to decide what you want in your home. We have a great checklist that categorizes items into “wants” and “needs” as well as listing these items of importance. This will help pick through the hundreds of listings to match exactly what you're looking for. These are a few items to consider when making your decision:
The Basics - Price, Style, age, location, condition, accommodations, ect
The Lot - Size, garage, fenced, deck, amenities, ect
Interior - Sq Ft, bedrooms, bathrooms, specific features, ect
6. FIND A REALTOR
Once you have been pre-approved and know exactly what you're looking for in a home, a realtor will be readily available to get you on the path to homeownership!
7. Tour homes
Your agent will be able to search the market and set up showings for the homes that best meet your search criteria. Be sure to:
Take photos and notes to review later
8. NARROW IT DOWN
Your search may be overwhelming but here are a few ideas to help narrow it down if the homes are all comparable:
Visits the neighborhood at diﬀerent times to test traﬃc, noise, ect.
Test commute to work, shopping, ect
9. MAKE AN OFFER
If you have narrowed your search down to “the one”, Congratulations! Your agent will sit down with you and discuss the terms of which you wish to make in a purchase agreement (sales contract). They will assist you in an appropriate offer based on their knowledge and expertise of the market, produce the agreement, along with any contingencies you may have including inspection and financing, present your offer and negotiate any counteroffers that may arise on the other side.
If you have chosen to have an inspection, your offer will be contingent based upon the results and willingness to remediate any defects that arise from the results. Your agent will go over the time frame the inspections will take place to the time the sellers have to fix any concerns.
11. FINAL WALK-THROUGH
This is scheduled just before closing to ensure nothing has changed to the property since the time you wrote your purchase agreement. Things to check will include, but not limited to:
Faucets, drains, toilets
Windows and doors
Lights and electrical outlets
12. CLOSING DAY
Finally, the big day! Before you have closed, not less than 3 days prior, you should have received a HUD-1 Settlement Statement. This document will include the actual amount you need to bring with you at closing. During closing, ownership of the property is transferred from the seller to you. All funds are distributed and the new deed is registered in your name. Keys will be in hand and you will officially be a new homeowner!