Buying a house is something that takes a great deal of planning and effort. For many people, this is the largest purchase that they will ever make so it has to be done right. It is a very stressful process and it can even be quite emotional at times as well. Especially if this is your first home, or if you are saying goodbye to an old property.
As there is so much to think about, it is always a great idea to have a checklist ready to go. We have prepared a checklist below that will allow you to navigate exactly how you plan to go from thinking about buying a house to the closing date and moving in.
Here’s a checklist for buying a house as a first time buyer:
1. Check your credit score
When you are buying a house, you are going to need a mortgage and to get a mortgage you are going to need a good credit score. You can often check your credit score for free. The higher your score the more you will be able to borrow from the bank. This increases your buying power.
Your credit rating will also affect the interest rate that is offered to you by your lender. Even a few points difference in the interest rate will have a huge impact on what you will pay throughout the amortization of the loan.
2. Clean up any blemishes on your credit profile
When you look at your credit report, there should be no surprises since this is one of the most important items in your buying a house checklist. If you see any credit cards or loans that you are unfamiliar with then you need to have that information corrected or investigated.
If someone has taken out credit in your name this could be an indication of identity theft or fraud.
3. Shop around for a mortgage lender
Not all mortgage lenders are created equal. You should speak to a few and learn what they are willing to offer you in terms of a mortgage. You need to know how much you are pre-approved from as this will help to guide your search for a house.
4. Save up for a down payment
The down payment on a property is usually what prevents first-time homebuyers from being able to enter the housing market. 20% of the value of a home is a significant amount of money. It can take months or even years to save up enough to afford the down payment even if your credit is in perfect standing.
5. Be realistic in your search for a house
Now that you know how much you can afford, be careful not to step outside of your budget when house hunting. It can be very disappointing to look at a home that is perfect for you in every way, only to find out that you can’t afford it.
6. Contact a realtor
A real estate agent will take a lot of the pressure of your search for a house. You can simply provide the parameters that you’re looking for and then wait for the realtor to supply you with a list of houses that you can afford and fulfill the requirements that you have laid out. For example, you could have a budget of $750,000, and want 3 bedrooms and a large back yard.
The real estate agent will be able to use their experience to look past the list price of the property and provide an insight into what it will actually sell for. This expertise will save you a great deal of time and energy as you will only be encouraged to put an offer in on a house that you can afford and have a realistic chance of buying.
7. Make the right offer to buy a house
Your realtor will guide you through this process. There are a number of tactics at play that you can use to your advantage such as bully offers. There is something of a dance to navigate when it comes to putting an offer in on a property and the best realtors in the business can make some real magic happen.
8. Don’t make any other moves
Keep your job, don’t apply for credit, and don’t buy a car. Any uncertainty in your ability to afford your mortgage payments will spook the lender. If you start a new job you will probably be in a probation period where you run the risk of losing your job. Keeping a job that you have been at for many years will go a long way to convincing a bank or lender that you are secure in your ability to make payments.
Avoid applying for any more credit in the meantime. The more credit you have means that your debt to income ratio will be affected. This can cause your buying power to be limited. Too many hits on your credit profile can also lower your credit rating too.