If you’ve never bought a home before or are shopping with your significant other for the first time, the prospect of everything that has to be done ahead of time can be a little overwhelming. If you aren’t where to start or what items for which you need to plan ahead, review the checklist below to get you started!
- Get a Credit Report: in order to plan for the type of loan you may qualify for, you’ll need to know your credit score so request a report in advance to see where you stand
- Set a Budget: you usually should not plan to buy a house whose monthly payment will exceed 25% - 35% of your income, but be sure that you have at least this much money available to allocate toward your mortgage payment before you start shopping
- Save the Down Payment: typically you will want to save at least 20% of your home price for the initial down payment to avoid having to get mortgage insurance, so put this money aside in advance at whatever savings rate works within your spending plan
- Find an Agent: seek out a realtor who comes highly recommended and has good reviews from someone you trust, it is important to have a person representing you who has your best interests in mind
- Search for a Home: the agent can help you with this but know your parameters up front as far as pricing, neighborhoods and general deal breakers go
- Make an Offer: do research in advance on prices for which other houses in the neighborhood have been sold and have your realtor help you base your offer on that data
- Enter Contract and Have Attorney Review: the deal will be contingent on you securing your mortgage loan and the house passing inspection so make sure your attorney thoroughly reviews the offer to ensure you are well informed about the contract details
- Secure a Loan: contact a mortgage broker that can help you find the most appropriate loan for yourself and your family
- Get an Inspection: the inspection is one of the most important final steps in making sure the home you are buying is the sound purchase you hope it is
- Close the Deal: assuming all of the above goes through without a hitch, close that deal and enjoy your new home!
As you can see, buying a house requires careful planning and a team of fiduciaries on your side to help guide you through the process. If you need help with understanding your credit report, budgeting for the down payment or planning to pay for the monthly expenses – contact your financial advisor! A goal without a plan is just a wish so stop wishing and get to planning!