If buying a home is on your list of New Year’s resolutions, now is the perfect time to start planning. The more you can prepare for a home purchase, the better off you will be. Here are some top tips to start the process.
1) Evaluate your current living situation. What do you like, what do you not like? Perhaps you love the area you live in but are cramped for space, or you enjoy the low maintenance of apartment living but want to start to gain equity with a mortgage payment as opposed to paying rent to a third party. Make a list of what is most important to you and then try to list out your top 2-3 priorities. Some aspects to consider are: location, school districts, bedroom/bathroom count, yard space, neighborhood amenities, etc.
2) Know the facts of your current home expenses. If you are currently renting, find out the exact date your lease is up for renewal and how many days you are required to give notice if you do not plan to renew. It’s also valuable to know what it may cost to break a lease should you need to. Whether you rent or currently own, make sure you’ve broken down the added expenses of things like HOA, renter’s insurance, homeowner’s insurance, taxes, etc. That way you can be ready to make a more accurate apples-to-apples comparison once you find a home.
3) Organize your documents. While you are in the process of prepping for the new year, this is the time to organize financial documents you may need to provide to purchase a house. These may include things like tax returns, W2s, K1s if you’re self-employed, paystubs, etc. It will be much easier to go through the process if you already have these handy.
4) Get Prequalified. While some may think that you should talk to a lender once you’ve actually begun the home search process, it’s actually very beneficial to begin this discussion before you’ve spent the time looking at homes. A lender will be able to check your credit report and give you an accurate estimate of what you can afford, as well as different loan programs to consider. Perhaps you’re closer than you think to saving up a larger down payment. By having this information at the beginning of the year, you may be able to arrange your saving habits to meet that goal.
5) Find a trusted real estate agent. Once you have a scope of what you’re looking for and know how much home you can afford, a real estate agent will be your guide to helping you find the home to fit your needs, as well as represent you in the buying process. It is ok to engage with an agent even if you’re not ready to buy for a while. They will be able to give you further guidance on what to be considering until you’re ready to officially start the home search process.
While buying a home can be a large financial move, it doesn’t have to be overwhelming. By doing a few steps to plan, you will learn valuable knowledge to help make the process easier.