Call Us Today! (916) 203-9690 | renee@reneecatricala.com

7 Ways to prepare before buying a home

Real estate collageThe process of buying a home doesn’t just start when you first start touring properties that are for sale and writing up offers. In fact, there are a few essential steps to prepare correctly for your home buying journey. But with a little foresight, work, and organization, the your hunt for the perfect home will be smoother, more enjoyable – and also save you a lot of money. Here are 7 ways to prepare before buying a home:

  1. Budget and save:

A great place to start preparing for a home purchase in the near future is by taking a hard look at your budget and bank account. By tracking expenses and setting a realistic budget, you’ll be able to what kind of house payment might be realistic. Additionally, studies reveal that the number one reason people DON’T purchase a house is because they can’t afford the down payment.

The good news is that there are loan products that allow you to buy without coming up with the 20% down payment that used to be the standard in the past, but even 3% to 10% of a home value can add up to a sizable amount, not to mention other closing costs and fees. So by sharpening the pencil on your budget and coming up with a plan to save money every month, you’ll have a realistic plan to start amassing your down payment and a timeframe to work with.

Of course it you are counting on the proceeds from the sale of your current home to buy your next residence, your first step might be to sit down with a real estate agent, so we can examine what your home might sell for and how much profit you’d net.

2. Look up (and maybe repair) your credit score:

Unless you’re paying for your next home with cash, you’ll have to apply for a mortgage loan to fund your home purchase, and there’s no number more important to the bank or lender than your credit score (as well as your monthly income.) In fact, the best way to ensure you get a fantastic low interest rate on your mortgage (and therefore a low monthly payment) is by maintaining an excellent credit score. Even the difference between a 670 FICO and a 730 FICO could potentially save you (or cost you!) tens of thousands of dollars over the life of your loan. So we recommend you get a copy of your credit report and scores six to nine months before you plan to buy a house and apply for a loan.

Remember that even if you pay everything on time and think you have a good score, almost one third of all credit reports contain errors like incorrect or outdated information that can lower your score, and identity theft stings up to 1 in 8 people in the U.S. in any given year. Since you’re taking a look at your credit well ahead of time, you’ll catch those snafus early and have time to repair your credit with the help of your mortgage lender or a reputable credit repair agency.

3. Find a mortgage broker:

Instead of trying to calculate how much house you can afford, what your payments might be, and determine your credit score, you’ll probably want to sit down with a mortgage broker. A loan officer can run your credit to see your score and also how much monthly debt you hold, as well as tell you what documentation you need to get together like bank statements, tax returns, pay stubs, etc.

Armed with all of that accurate information, they can prequalify you for a mortgage, with good approximations of how much home you can afford based on debt to income ratio, what your interest rate might be, estimated closing costs and down payment, and the every-important monthly payments. Of course this information may change slightly by the time we find you a home and get in contract, but after committing to a great mortgage lender who does the hard work to get you the best loan, you’ll be well on your way.

4. Sell? 

If you’re a first time homebuyer or will be moving from a property you’re renting, then you have a relatively easy path to buying a new home. But for those who own their current home, they should look at the process of listing their home early in the game. We can easily give you a detailed analysis of what your home might be expected to sell for in today’s market, and also a rundown of what profit you might net after all fees and payouts. Knowing this bottom line will probably make a big difference how we start taking on the prospect of buying.

5. Form a home buying strategy

Will you be writing contingent offers? How comfortable are you with repairs to potential homes? Do you have your lender letter and financing all set? What dates and times can you commit to going to search for homes? And ideally, when would you like to find and close on your new address? We can sit down with you and plan our home buying strategy so there are no surprises, confusion, or ill preparation once our search begins!

6. Start narrowing down neighborhoods:

I’m sure you’ve heard the old real estate mantra, “location, location, location” – and it still stands true today. The single best way you can ensure you make a wise investment when buying a home is by choosing a good quality neighborhood, but too many people fall for the fools gold of purchasing an aesthetically pleasing home in a marginal neighborhood. Remember that you can fix up and improve your home, but there’s little or nothing you can do about your neighborhood.

So start by narrowing down what characteristics and amenities you are looking for in a neighborhood, like good school systems, parks, bike trails and recreation areas, commute times, traffic flow, crime rates, and proposed growth, and of course tracking the trend of home values in those neighborhoods. With all of that data at your disposal and a list of priorities, you’ll be empowered to make a great decision when it comes time to go out looking at homes for sale.

7. Draft a wish list for your perfect home:

We’ve finally come to the fun part – going out together and actually viewing homes for sale! With all of our preparation and hard work we’ve put in, we’ll know that you’re preapproved for a mortgage loan, your price range for homes, and what neighborhoods fit your needs. But before we jump into my car on a Saturday morning or one evening after work and start touring homes for sale, you’ll want to write up a wish list for your perfect house. How many bedrooms are ideal? Bathrooms? Do you want an open floor plan with a great room kitchen and living area? Is a single story home preferable, or are two stories ok? How about a swimming pool?

Now that you have your wish list for the ideal home, make another list, but this one with what you absolutely need in a home – not just what you want. Prioritize these needs from 1-10 (for instance, you’ll need at least 4 bedrooms if you have a big family, etc.) so we can work together to find the right home that offers the amenities that are most important to you.

***

Let’s get started – and happy house hunting!