Prepare Now to Buy a Home Later This Year

Buying your first home doesn’t happen overnight. It does take some planning and some foresight. If you hope to buy a home this year, start preparing now!  I’ve got it all covered in our handy checklist below. Stay on task you’ll be ready to buy in no time.Buying your first home doesn’t happen overnight. It does take some planning and some foresight. If you hope to buy a home this year, start preparing now!I’ve got it all covered in our handy checklist below. Stay on task you’ll be ready to buy in no time.Do Your HomeworkAs a first-time buyer, it’s very important to become educated about buying a home. You want to truly understand what it takes to buy and own a home before you even start seriously looking. Here are some key activities you should do now:Learn about mortgage options. Do you understand how mortgage rates work, such as fixed rates or ARMS? Or the difference between a FHA loan and a conventional loan? Learn what’s available now and even the outlook for rates in the coming year so you aren’t overwhelmed or surprised later on. This way you can determine what type of financing will be best for you.Visit open houses. Check out certain neighborhoods in terms of cost and features of homes. Internet sites such as Realtor.com or MLS.com will include open houses and current listings. Actually walking through homes can help you explore your wants and needs in a more direct manner. Get a better feel on what’s important to you, such as location, large kitchen, backyard, open-concept, or size of rooms. With condos, you’ll also get an idea of monthly HOA fees and amenities in different buildings.This time spent “scoping out” homes provides a reality check and will make you more efficient when it comes time to really house hunt!Find out about assistance programs for buyers. Did you know that there are government assistance programs that can make buying a home much more affordable? You’ll be amazed to see what is available for mid-income buyers, first-time buyers, veterans etc. Programs from local housing authorities can help with down payment or low interest loans; and many buyers can qualify for this assistance.Don’t disqualify yourself before you try. I can go over what’s available in the DC metro area with you. That way, you’ll have more confidence that you can become a homeowner. Plus, you may be closer to owning a home than you originally thought!Check out my “Buying a Home 101” series. I've pulled together this series so my clients could have an overview of everything, and I mean everything, when it comes to buying a home. This series takes you step-by-step … check it out here.Accept you have a learning curve to face. Everyone has been in your shoes before, so don’t be embarrassed if you don’t know everything. No matter what, don’t be afraid to ask questions. Meet with a realtor or a mortgage broker for an information gathering session. Or attend a home-buying seminar to get more acquainted with the process. Check out real estate sites or columnists or articles in the media.Get Your Finances In OrderBuying a home is probably THE biggest expense you will ever have in your life. You want to be a responsible buyer and homeowner, so now is the time to focus on your finances.Strengthen your credit score and build credit history. Your FICO credit score is your gateway to a good mortgage since lenders use it to determine your risk as a borrower. So the higher your score, the better your loan options. And, if you’re a couple, then BOTH of you will need to work on your credit!It can take 6 months or more to improve your score, so start today. Pay your bills on time, don’t take on any large debt, and double check your score for inaccuracies. Check out: “How Your Credit Score Can Impact Loan Options.”Know what monthly mortgage payment you can afford. I have my own Rule of Thumb when it comes to determining affordability. What a lender says you CAN afford can be very different in what you are willing to spend each month. No one wants to be stretched too much and become “house poor”.Work backward from your monthly payment to calculate the price range you can afford. For more information on how to budget for a home and determine what you can afford, check out: “What Should Your Monthly Mortgage Payment Be?”Save for a down payment. Cut expenses and save, save, save (maybe find a high-yield savings account) right now! No matter if you get a 3% down loan or a conventional 20% down loan, lenders still want to see if you have enough cash reserves in the bank. Remember, owning a home isn’t only its purchase price, but it includes other costs such as taxes, insurance, maintenance, and possible HOA fees. With a larger savings account, a lender knows your financially responsible and less of a risk.During this time, you can even “play house” and see how you handle living with your “affordable” monthly mortgage payment. Can you handle it?Revisit your lease agreement. If you’re a renter, take a look at your lease to see when it comes up for renewal. Find out if you’ll be hit with any penalties if you terminate it early. Maybe you can time buying a home so that it comes close to that date. Or, give yourself a goal and use that date as an inspiration (or deadline) to get things in order so you can buy a home then!As you can see, start planning now if you want to buy a home this year. You’ll be a more informed buyer and ready to finance and purchase your home with less stress. Contact me with any questions.