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4 Things to Do Before You Start House-Hunting
If you’re interesting in buying a home, taking a few steps before you start looking can save a lot of time and trouble. Looking at house after house without a plan to help hone in on your priorities can be a frustrating waste of time. Or you may find a home you love, only to discover that you can’t qualify for a mortgage or afford a home in this price range. The following steps will help you have a firm grasp of what you’re looking for, what you can afford to pay, and how easy it may be for you to qualify for a mortgage loan:
Figure out what you can afford
One of the first steps you should take it to figure out what kind of monthly payment you can afford. If you’re paying monthly rent or another mortgage payment now, has it been manageable? Could you comfortably handle a higher payment, or should you look for a somewhat lower monthly obligation?
Keep in mind that your mortgage payment may also include property taxes and insurance. Property taxes and the interest on your mortgage loan are usually tax deductible, so that may lessen some of the financial burden at tax time.
Figuring out what you can afford will help you determine what price range of houses you should be looking at. This way, you won’t waste time and become frustrated by looking at homes that you can’t afford.
Clean up your credit history if needed
Your credit history has a large impact on whether you can get a mortgage loan and the interest rate you’ll pay on that loan. Take the time before you start looking to get a copy of your credit report. The Federal Trade Commission recommends using annualcreditreport.com to get a free copy. If your report has errors, you’ll have time to correct them. And if you have some late payments reflected on your report, you should make sure to pay every bill on time every time in the future.
Raising your credit score will put you in a better position when it comes time to apply for a mortgage. A score that’s too low may disqualify you from obtaining a mortgage or result in a higher interest rate if you do get the loan.
Save for additional expenses
Home ownership, especially if you’re a first-time buyer, involves more than just a monthly mortgage payment. You’ll probably need a down payment, as well as money saved to pay for routine maintenance. You may also have additional expenses for lawn-care equipment, window treatments, appliances, and other needs.
Make sure that you have enough saving to cover an initial stream of expenses, plus some more in reserve for ongoing maintenance.
Make a list of priorities
Take some time to figure out what’s important to you in a home. Make a list, and divide it into “must haves” and “would to like to haves.” For example, you might think it would be nice, but not completely necessary, to have a garage. On the other hand, you may determine that a big backyard is non-negotiable.
Some elements can be changed if you’re willing to put some money into the house. For example, if you have your heart set on granite counter tops but find a home with everything but that feature, you can always have them installed later.
By planning ahead before you actually start house-hunting, you can put yourself in the best possible position to be able to find — and afford — a house that you’ll love. You’ll look only at houses that meet your “must-have” priorities and that are in your price range. You’ll be able to secure a monthly mortgage payment that doesn’t leave you financially strapped each month. And finally, you’ll have enough money to buy what you’ll need to properly maintain your home.