Important Steps Before Buying a Home: Preparing for the Home-Buying Process
So, you’re ready to buy a home. Home ownership is a major milestone in anyone’s life — but also one that involves lots of complexities and responsibilities. That’s why it’s important to take the necessary steps before shelling out the down payment. If not done correctly, buying a home can cause major financial regrets that can last a lifetime. Before signing on the dotted line for your home, consider these tips — from determining where you want to live to all the documents that go along with the purchase:
Research the neighborhood
You know what they say: location, location, location. Consider factors like crime reports, school options, job market and cost of living. And above all, it has to be a place you want to stay for a while. In fact, experts recommend buyers plan on staying in a new home no fewer than five to seven years.
Find a realtor in advance
Start talking to your local realtor six months ahead of time. Most have a good relationship with mortgage experts in the area. And there are a lot of programs out there for first-time buyers. Some local governments offer interest rate or down payment subsidies to buyers who agree to buy a home in certain areas. Also keep in mind that governments or employers may subsidize teachers, fire fighters, police officers, nurses and other service professionals who might not be able to afford a home in high-priced areas.
Ensuring that you’re preapproved for a loan makes the home-buying process a lot easier on you. An upfront preapproval letter will help give the seller confidence that the buyer can close the loan and obtain the funds. So before you even begin your search, make the process of getting preapproved mandatory. If you are well-prepared, you’ll be ready to make an offer when a good deal comes along.
Establish what you can afford
You might find that the maximum you’re prequalified for is higher than you anticipated — and that doesn’t necessarily mean you should spend that amount on a home. Instead, determine what you feel comfortable spending. If you’re just getting by with your current rent payment and a lender says you can qualify for more, give it some thought.
Collect necessary financial documents - there’s a lot of paperwork surrounding home buying that a lender will need. Items such as income tax returns, W-2 wage statements, paycheck stubs, bank and investment account statements, divorce decrees, child support documents, and recent credit card statements. Keep all these documents in one folder, which will keep you organized and ready. This will also help you come up with your budget — what you can comfortably afford as a down payment and monthly payments, as well as taxes, insurance and other expenses.
Try to keep a steady credit history
If possible, during the process of home buying, put off any major changes that can affect your credit, such as switching jobs or purchasing a new vehicle. Unless the job is in the same industry and with higher pay, lenders aren’t keen on you changing your financial picture during the process of a pending mortgage application.
If you’re looking to buy a home, we can help you get the mortgage you need. Ask Washington Trust today!
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