Seven Steps to Consider Before Buying a House

Buying a home is one of the biggest financial decisions most people will ever make. Whether you’re a first-time home buyer and not sure where to start, or a seasoned homeowner looking to relocate, it’s important to educate yourself on the process. Here are seven steps to take before you start house hunting.

1. Assess Your Financial Health

Start with your finances. Review your income, expenses, debt, and savings. This can help you understand what you can realistically afford and prevent you from getting in over your head. Try a budget planner to evaluate how much of a mortgage payment you feel comfortable with each month.

2. Check (and Strengthen) Your Credit Score

Your credit score plays a part in the interest rate or closing costs of your loan but also determines whether or not you can get approved for a loan at all. Check your score early so you have time to improve it if needed. Paying down debt, avoiding opening new credit accounts, and making all of your payments on time will help increase your score.

3. Save for a Down Payment and Other Costs

A down payment can range from 0% to more than 20% of the home’s purchase price, depending on the loan program. While that number can seem high enough, don’t forget about closing costs, inspection and appraisal fees, moving expenses, and even any repairs or renovations that might need to be done before moving in. Setting up a dedicated savings account for all homebuying-related expenses will help keep you on track.

4. Get Pre-Approved for a Mortgage

Today’s market is a challenging one. Having a mortgage pre-approval in hand when house shopping shows the seller that you’re a serious buyer. It also helps you have a clear idea of your budget and what you can actually afford. Chat with a local lender to hear about the variety of home loan programs offered that can meet your needs.

5. Define Your Needs and Wants

Are you a list maker? Track your must-haves (like number of bedrooms or specific location) and your nice-to-haves (like a walk-in closet or mud room). This will help you stay focused during your search. Consider long-term goals and plans – will you need room to grow? Is there ample yard to add that pool you’ve always dreamed of or space for a garage?

6. Hire a Knowledgeable Real Estate Agent

An experienced agent can help you navigate the market, negotiate offers, and guide you through the paperwork. They’ll also have insights into local trends and things to flag for consideration. Ask around your network of people for referrals and read reviews to find someone you can trust.

7. Understand the Full Cost of Homeownership

After setting a budget plan and narrowing the details of what you’re looking for, a final step is to ensure you understand the full picture of homeownership. There’s more to it than just a monthly mortgage payment. Property taxes, homeowner’s insurance, utilities, possible Homeowners Association fees, and maintenance all need to be considered as well. Get started with a mortgage calculator.

Buying a home is an exciting milestone and it pays to be prepared. By following these steps, you’ll set yourself up for a smoother, more confident home-buying journey – and be ready to find a place that truly feels like home.