It isn't very often that you get to choose your home. So once you arrive…
Buying a home is a complicated process, and it’s easy to become stressed over all the details you need to think about. However, preparing the ground properly before you start browsing listings can remove a lot of the hassle and worry. Here are seven of the most important things to do.
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1) Check Your Credit Report
The first step is to get hold of your credit file and check out your true situation. Is your credit score as good as you thought? If not, can you do something about it, such as correcting any errors on your record, paying off any small debts, or reducing your open lines of credit?
Over the lifetime of a mortgage, your credit score’s effect on the interest rate can add up to thousands of dollars extra, so it’s vital to start from as healthy a position as possible.
2) Budget for Hidden Costs
Before deciding how much home you can afford, take into account all the hidden extras involved in home-ownership. You’ll be responsible for maintenance, local taxes, insurance, and many other expenses, which maybe didn’t apply as a renter.
Buying a home you can afford is about much more than the monthly mortgage payments. Be as detailed as possible when drawing up your budget before you decide on the price range you’ll consider.
3) Review Your Down Payment Options
The larger the down payment you can provide, the better the mortgage deal you can get and the more you can spend on a home. Have you saved enough to make a reasonable down payment? If not, could you sell an asset or maybe borrow off family to push it up?
Wanting to buy a home as soon as possible is understandable, but the down payment is so important it’s better to wait a year or two if that could increase the size of the down payment you can offer.
4) Shop for Mortgages
Once you’ve got your essential finances in shape, it’s time to start looking at mortgage options. It’s vital to shop around diligently rather than simply relying on your own bank or your family’s traditional mortgage lender.
There’s a wide range of packages available for most circumstances, and if you don’t compare a large selection of deals, you won’t have a clear picture about what’s genuinely a good or bad choice.
5) Apply for a Mortgage Pre-Approval
Once you’ve found a potential mortgage to fit your budget and price range, apply for a pre-approval with your chosen lender. This will help in two main ways.
First, if you’ve miscalculated what you can afford, then being rejected for a pre-approval before settling on a home will save a lot of time and disappointment.
Just as importantly, even if your financial situation is straightforward, a mortgage approval can take time. If you’ve got your heart set on a home, you’ll want to avoid unforeseen delays which could scupper the deal. Having a pre-approval in place removes at least one potential stumbling block from the process.
6) Make a Priorities List
Before looking for potential homes, make a list of the features you need, those which would be nice to have, and those which would be immediate deal-breakers.
For example, what’s the bare minimum of bedrooms you need to house your family? How many extra rooms would be a useful bonus, and how many would be a simple waste of money?
Or, is a large kitchen with a dining area an absolute essential? Would you prefer a smaller kitchen and a separate, more formal dining room? Or would a tiny kitchen be a complete no-no?
Once you start on viewings, it’s easy to be bowled over by your first impressions of a home, fall in love with it, and ignore the niggling thoughts that some parts of it are not quite right for you. Having a detailed list to refer to will help keep you grounded to avoid buyer’s remorse later on.
7) Hire a Buyer’s Realtor
Nearly all sellers hire a realtor, but you should hire your own buyer’s agent to get the best outcome. It would be best if you had someone to be on your side during negotiations and dispassionately point out any potential problems with a home. It’s also helpful to have an experienced professional liaising with the sellers’ realtor to make the whole process go as smoothly as possible.
Buying a home is an exciting experience, but there’s always some level of stress involved too. Being fully prepared before you begin will help you enjoy the adventure with much less of the worry, hassle, and drama.