Consumer Comeback Blog

Things to Consider Before Buying a Home

Buying a home is a big investment and a big milestone in a persons life, but there are many things that must be considered before doing so. The very fist thing you want to do is spend some time saving up money for a down payment, there are ways to work around a down payment but it is best to have one and it will also make your mortgage payment lower.  Another one of the very first things you should do is check your credit score to make sure it is in good standing so you an get a loan. Having good credit is the key to buying a new house, so if your score is not at least in the mid 600 range then you should work on repairing the issues that are causing the problem. In many cases the problem that is causing a low credit score may have been something you forgot to pay in your past, in this case it is important to pay these things off. Once you pay off any outstanding bills you will see your score go up but it will not be an instantaneous thing, it usually takes at least a month or two before it reflects on your credit score.

Once you know that your credit is in good standing the next thing you need to think about is how much can you afford to spend on a house. This is another step you can do yourself, the best way is to make a list of your monthly bills that will always be there even after moving into a new house. This includes utility bills and you need to remember in larger living quarters these may go up. Because of that you should add a little bit to what you are currently paying for utilities like heat an electric since they are the main two things that will go up. Once you have a monthly total of all your bills and groceries you need to see what is left going by your current household income. Obviously you do not want every leftover penny to be your mortgage payment, so you need to ensure you also have money to put away in case of an emergency and any spending money you may use during the month for going out with your wife, or to a football game with your friends etc. Once you consider these extra things you can take the estimated amount out of your leftover money each month as well. What you have left is probably the maximum amount you can afford for your house payment. After you know this you can start to figure out what price range of homes you want to look at and contact a real estate agent or start looking on your own and then contacting the realty company listed on the sign of an available house you are interested in.

Usually finding the perfect house will take you a couple months, and then after you find it there is usually another month or two before you will have a closing. During this time you should be saving every penny you can because when closing time comes you will have some unexpected expenses arrive on top of the normal closing costs. It is not a definite that you will have extra expenses, but more often than not that is the case. Also be prepared to find hidden problems in the house that the prvious owners never told you about, this happens all the time and in most instances you will have to invest some money into the house right after you buy it so having extra money after the closing is important.

A few other things you may end up needing are your tax returns from the previous year or two, paycheck stubs for everyone whose name is on the mortgage. Having a recent credit report on hand when you are first talking with a mortgage loan provider will help as well, and will keep your credit score from being accessed for a second time since you already did so in the beginning.  Going in prepared will make the whole process go much faster and will be a lot less stressful on you, and soon enough you will be in your new house!

Here are some links to help you with some of the steps you need to take:

Mortgage/Loan Calculator

Home Budget Worksheet for Buyers

Image credits: pnwra