Home Buying Checklist

The idea of buying a house can be really daunting, especially in this day and age. Taking the first step is incredibly difficult, but you’ll find yourself excited about your new home in no time! Here’s a check list of things to do and figure out before beginning your search!

• Decide on a budget
  You don’t want to get a place that is outside of your means! You will want to calculate your debt-to-income (DTI) ratio, which is basically your monthly expenses versus the money you make each month. To secure a qualified mortgage from most lenders, this ratio should not be more than 43%, but the less that is the better. You want to also account for all the other expenses of home owning, such as buying furniture, maintenance costs, and activities you would like to do such as eating out and travelling. There are calculators online to see how much you should be able to afford. Be reasonable with what you will be able to afford!
• Save for the down payment
  Depending on what type of mortgage loan you want to get might change how much you are looking to place as a down payment. The more you put down, the more you will save over the lifetime of your loan. The bigger the down payment, the less you will have to pay in interest rates and the smaller your monthly payments would be. Some people get a side hustle to put aside money for this and it’s never too early to start saving!
• Check credit and strengthen if necessary
  Your down payment isn’t the only important financial part, as most people need a loan. The better your credit is, the better chances you have of getting lower interest rates on a mortgage. Check your credit score. You are entitled to check your score every 12 months from three different nationwide credit reporting companies: TransUnion, Equifax, and Experian (you can use this website to request them). The numbers may vary because every entity that runs your credit uses different measures, but the difference between bad, good, and great credit is relatively the same. If your credit is lacking, there are many ways to improve your credit, we will have a post on how to do that!
• Research the best mortgage option for you
  There are many different types of mortgages out there and not all of them will be the right fit for you. The most common is conventional/fixed-rate loans. You can learn more about different types of mortgages here).
• Gather all your documentation
  A lender is going to ask you for lots of documentation when applying for a mortgage. To save some time you can expedite the process by obtaining the documents beforehand. You will need: income verification/employment (last 2 years’ tax returns, W-2s, 1099s, and your last few pay stubs), credit/ID (drivers’ license, Social Security card, or acceptable alternatives), and your financial condition (band and brokerage account statements including retirement accounts, proof of funds, a gift letter (if your down payment is coming from a gift)). They might ask you for other documents, but this is the basic list to get started.
• Get pre-approved
  Before even beginning to look for homes, find a mortgage lender. This will help you get a lot of the paperwork out of the way upfront and will give you a tentative pre-approval amount. They can also help you finalize the loan type and the loan term (15 years, 30 years, etc.). This gets you one step closer when it comes to making an offer on a home. A letter of pre-approval does not commit you to a lender, it is encouraged to ask a variety of lenders to see what the most intelligent financial decision is. 
• Find a real estate agent
  A real estate agent is not necessary but makes the process less stressful, they will do the research, contracts, and a lot of other time-consuming parts that come with homebuying. Of course, we would love to be your agent and make your experience the best but finding someone who you trust and are comfortable is important.
• Have a list of things you want!
  This is the beginning of the fun part! Want a yard? A big kitchen? Make sure you let your agent know! You can also give them a list of the neighborhoods that would be ideal for you. Remember they are helping YOU find the home you want to invest in! Have a list of must-haves, but do not discount houses that are not perfect for cosmetic issues that can be fixed later.

Now you’re ready to bring your house hunt! There are other things that come after finding the place you want, but the first part is to start!