If you are thinking about buying a house in the next year or two, now is the time to make sure everything is in place so you’ll be ready. If you have never bought a home before, it is especially important to start learning the process so you can be prepared and informed about your choices.
Speak with a Realtor
As a real estate agent, I think it is important to understand the process from start to finish so that you are ready when you find your dream home. Rushing through the largest purchase of your life is definitely not a good idea, and an agent can help you focus on the important parts of the home buying timeline. While one of the first things I will ask you is if you have already been pre-approved for a loan, that is just one step in the timeline. Going over how we will work together, what you will need to consider when making an offer on a home, and determining what and when you should purchase are part of what we will talk about. It’s also great to have an agent lined up so that you can keep up with the changing market and get new home listing notifications.
Check Your Credit Report
Qualifying for a loan will depend on your credit report a lot, so you need to make sure everything is correct. (See what credit scores are needed for different loan programs here.) Order your credit report from each of the three reporting agencies (you can get it free once each year here) and make sure there are no inaccuracies. If you see anything that is wrong you can contact them to have it removed or corrected. Some reports estimate that over 50% of credit reports contain wrong information so it’s important to check, even if you have good credit.
Save for Down Payment and Closing Costs
There are many different loan programs today, some are available with 100% financing through USDA loans, while others require a down payment ranging from 3.5% to 20%. In the Winchester area we have a couple of down payment programs that can help including VHDA and Blue Ridge Housing, which can also help with closing costs. Having a health savings account will help you qualify for more loan options and possibly better interest rates.
Create a Savings Plan for Home Repairs
Owning a home means you are responsible when disaster strikes. Everyday simple things like a clogged toilet, leaking garbage disposal or appliances on the fritz will have to be dealt with by you, not the landlord. Buying a home warranty can help with larger problems, and having money set aside for the small fixes will be important as a home owner, so start setting aside $50 a month now so you’ll be ahead of the game.
Get Pre-Approved for a Mortgage
The final and most important step when preparing to buy a home is getting approved for a mortgage. This will determine how much you can afford and give you a more definitive understanding of how much down payment and closing costs funds you need. Even if you are unsure if you can qualify, speaking with a lender can help figure out what you need to do in order to qualify when the time comes. They can pinpoint if you need to raise your credit score or take other actions, and create a plan for you.