If buying a home is on your "to-do" list sometime in the next 6-8 months, Now is the time to start preparing!
Depending on the market it may not be the best time to actually get out and look at homes. In some cases you could find a home you fall in love with before you, or worse your credit portfolio, are not ready.
But there are some things you can do in the mean time...
Give yourself six
months between now and the day you would like to make an offer, and take a few
steps each month.
Here are some steps to take each month to fine tune your home buying portfolio.
6 months out:
Start a Financial File
If you haven't bought a home in the last few years, you'll be somewhat surprised to learn how tight the process has become for financing. Cash purchase preparation will be somewhat different. We can touch on that in another piece.
To start a pre-qualification file, whether you use a manila folder or digital file, you'll want to include your 1099's, or W-2's, paystubs, copies of your last three tax returns, and a list of your liabilities and assets.
5 months out:
Get Pre-Qualified
At this time you can talk with a Lender to get Pre-Qualified. This step will help you to uncover any potential credit blunders that may need resolving. Learning about these little snags can save you when it comes time to search and put an offer in on your dream home.
You can also learn about the different financing option with ease, not feeling rushed to decide, for fear that you may lose your home.
Once you get a snapshot of your credit portfolio, you can better plan for how much you may need to save for a downpayment, closing costs and other expenses. And, unless you have
little or no credit, don’t open any new accounts until after you close on your
new home. When you apply for new credit, it can shave a few points from your
credit score for the next year. Few or no accounts on
your credit report? Talk to a few different lenders about your options. Also,
the National Foundation for Credit Counseling has certified housing counselors
who can offer advice.
4 months out:
Location Search
This is a good time to do some homework on different areas that you may want to consider. Research schools, community activities, flood zones, crime rates. Drive the neighborhoods and see how they make you feel. Keep good notes so you can refer back when the time comes to start looking.
3 months out:
Create a Wish List
Some agent's may have tools to help you with this step, but as a starting point, make a list of your "must haves", and "must not haves". To take this further, you can rate each "must have" so that in the event a home has everything on your list but one item, that you rated low, you'll be able to see all of the great elements vs the one that is missing. This tool can help when narrowing down your search so that it doesn't get overwhelming.
2 months out:
Finalize Financing
You've been working on your credit portfolio for a few months and now is the time to reveal the full picture from your Lender on what you actually qualify to borrow. This step takes you from a Pre-Qualification to a Pre-Approval, which is a more in depth screening for financing. Having your financing in order will make your offer much stronger when presented.
You'll also want to work with your Agent and Lender to further uncover what your price range should be. This step takes into consideration the costs for taxes, insurance, maintenance and other expenses associated with owning a home. Sometimes what you qualify for is not what you may be comfortable with in a monthly mortgage payment.
1 month out:
Search is on!
Now that you know what price range you qualify for and are comfortable with, lets start searching. Have your agent set you up on an auto email based on your wish list criteria. That way you can get properties in your inbox, review photos and details and then pass on any contenders to your agent to schedule some showings! Keep in mind, sometimes less can be more. If a home does not meet all of your "must haves" you may not want to waste time viewing. If you find yourself wanting to see homes that do not match your wish list, you may want to consider revising that list.
Make an offer!
The final step, once your search is under way, is to find the home that you fall in love with! The one that just makes you feel "at home". Talk with your agent about what you feel comfortable offering, considering the Agent's perspective on what the home is worth. Talk about any concessions that come with your offer, your financing approval and how quickly you can close. In some cases it's nice to include a note explaining why you want this home so much. Sellers sometimes have an emotional attachment to their house and they want to know that the person taking over will love it just as much as they did!
Once the offer is submitted, await the counter or acceptance and move through the process of buying your home!
For more insight and resources on the home acquisition and sale process connect on my social media platforms! @MindyDRealty
Thanks for reading!
~Mindy
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