Have you been thinking about buying a home? People make this life-changing decision for many different reasons. Whether you’re looking for a new home that’s big enough to raise a family or planning to downsize, these tips will help make the entire process easier.
Here are six things you should do before buying a home:
1. Determine Your Wants and Needs
Before purchasing a home, it’s essential to research the features you want and those you’d prefer to avoid. Consider factors like home style (condominium vs. single-family home), preferred locations, and must-have amenities. Defining these preferences will help narrow down your search and make the process more efficient.
Using real estate apps such as Realtor.com and Zillow can help you explore available properties in your market within your budget.
2. Set a Budget
Buying a home is a significant financial commitment—likely the largest purchase you’ll ever make. While a lender will assess your financial situation, it’s wise to evaluate your own finances beforehand.
To determine if you’re financially ready, use online mortgage calculators to estimate your potential monthly payment based on the home’s price, interest rate, and associated costs.
Many potential homebuyers will take advantage of free homebuyer education courses. American Consumer Credit Counseling offers classes that will help keep your wits and your pocketbook intact when buying a house for the first time. And when coupled with ACCC’s credit counseling services you will have all the essential homebuying tips you could ask for!
TIP: When calculating your homebuying budget, don’t forget about additional expenses such as property taxes, homeowners’ insurance, utilities, and maintenance costs.
3. Monitor Your Credit Score
Lenders review your credit score to assess your ability to manage debt and make timely payments. Your credit score is based on your financial history, including mortgages, credit cards, car loans, and student loans.
A credit report also reflects any past foreclosures, bankruptcies, or late payments. To ensure accuracy, check your credit report at least once a year. You can access a free annual credit report at AnnualCreditReport.com.
4. Get a Pre-Approval
A fully underwritten pre-approval is a thorough review of your income, assets, and credit, allowing a lender to pre-approve you for a mortgage even before selecting a property. By submitting a complete application with all required documentation, you can receive a conditional loan commitment from an underwriter, subject to title review and property appraisal.
Benefits of a pre-approval include:
- Stronger than a standard pre-qualification
- Brings you one step closer to full mortgage approval
- No cost to the borrower
- Conditional loan approval before selecting a property
- A financed offer that is as competitive as a cash offer
- Valid for multiple properties until your offer is accepted5
5. Work with a Real Estate Agent
Once you have a pre-approval letter, you’re ready to contact a real estate agent. A knowledgeable agent provides invaluable insight into the housing market and can guide you through every step of the process.
They’ll show you available properties in your preferred area and provide market insights to help with your decision. When it’s time to make an offer, their negotiation skills and expertise will be crucial.
6. Understand the Importance of a Home Inspection
While a home inspection is optional, skipping it can be risky. Unless you’re willing to assume responsibility for any future issues, it’s best to have an inspector assess the property.
A professional home inspector will evaluate structural elements, electrical systems, plumbing, and more—identifying any hidden concerns. This step can protect you from unexpected expenses down the road.
Deciding to buy a home is a major milestone, but with the right preparation, the process can be smooth and successful. If you find yourself in a situation where you are unable to qualify for a home loan because you have too much credit card debt or need help managing your household budget, our counselors can help get you, mortgage ready! Contact us today to talk to a certified credit counselor.
If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today.
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