Owning your own home is a great feeling. In addition to the wider spaces and yard, you know it’s yours. You can do with it what you like (unless you are in a deed restricted area). It’s a once in a lifetime experience to go from renting to owning, but it can be confusing at times. With that in mind here are some things to remember as you embark on your journey to owning your own home and doing it in one year.
What to Do One Year Away From Purchasing Your First Home
Check Your Credit Score
This may seem obvious, but you may have things counting against your credit you of which you were not aware. To see what the three credit bureaus have to say about your credit score get a free copy of your credit report from annualcreditreport.com. Check it over to see if any errors in your credit history need to be corrected.
Set a Budget
Take time to budget out how much you can afford a month including mortgage payments, i
Save for a Down Payment
The majority of mortgages require around a 20% down payment. If you can afford to save that much or more on a down payment, it is a wise move. It will reduce your loan costs, and you’ll get a better interest rate. Make sure to start saving right away; banks like to see funds in savings for two or three months before you apply for a loan. If you are unable to save the full amount of a down payment, some programs can assist you. FHA offers loans that only require a 3.5% down payment. The catch is that they require mortgage insurance premiums, driving up your monthly payments. The U.S. Department of Housing and Urban Development (HUD) has a list of nonprofit homebuying programs listed by state. Your employer or credit union may also have assistance programs.
What to Do Nine Months Away From Purchasing Your First Home
Make Sure You Know What You Want
Do you have kids and want a big yard? Do you want a house close to your job? Do you want to be near family? Is the home in the neighborhood for which you were looking? Make sure you know exactly what you want before you commit to a monthly mortgage payment.
Check Out the House Before You Buy
Open Houses and Virtual tours are an excellent way to decide if a house is right for you.
What to do Six Months Away From Purchasing Your First Home
Start Gathering Documents Relevant to Your Loan
Here are the documents that will most likely be required by the lender.
- Personal tax returns for the past two to three years.
- W-2 forms or business tax return forms, if you own a business dating back two to three years.
- Several of your most recent pay stubs.
- Credit card and loan statements.
- Bank statements.
- Addresses where you have lived for the last five to seven years.
- Brokerage account statements for the most recent two to four months.
- Recent retirement account statements, such as a 401(k).
Collecting these will before applying for the loan it will save you time and frustration later on.
What to Do Three Months Away From Purchasing Your First Home
See if You Qualify for Pre-Approval
If you’ve been disciplined in following the items on your timeline, your credit score, your paperwork, and your down payment should be on target. Next, you’ll need to get pre-approved for a mortgage. Make an appointment with your lender and bring all the paperwork you have compiled. A credit check will be run on you and will tell you if and how much of a loan for which you have been approved. It is a good idea to borrow less than the maximum the lender offers so you can live within your budget from month to month.
What to Do Three Months Away From Purchasing Your First Home
Make an Offer on a Home
This is where all your home shopping pays off. It usually takes between four to six weeks to close a home so make sure to schedule a move out date far away enough to allow for any unforeseen developments.
Inspect the House
Get a home inspection before closing. Make sure it is someone with experience inspecting homes who can spot things that you might miss.
What to One Month Away From Purchasing Your First Home
Get Home Insurance
Home Insurance will be required before you can close.
Do One Last Walk Through of the House
Make sure there is nothing that was missed in the inspection or that developed afterward.
Pay for the House with a Cashiers Check or Wire Transfer
Make sure you know the precise amount you are paying a few days in advance so that payment goes smoothly.
If you are a renter in the greater Tampa Bay Area and are thinking about purchasing your first home, call me at 813-915-6649 or send me an email. I can guide you through the loan process
