15 Things to Do Before Buying a House
Buying a house is an exciting milestone, but it can also be a daunting process. It’s more than just signing on the dotted line and calling it a day; there are several steps you need to take before making such a big purchase. From getting your finances in order to understand all of the legalities, having an actionable plan before diving into real estate is key.
To make sure you’re well prepared to buy a house, here are fifteen things you should do first:
1. Know Your Credit Score
This three-digit number is one of the most important factors in determining your eligibility for a mortgage loan. It will also affect what interest rate you qualify for.
It’s advisable to learn your credit score before you even try to get a loan. That way, you know where you stand and can work on improving things if it’s not what you expected. Ideally, you should aim for a credit score of at least 700 before you apply for a mortgage.
A good credit score that leads to a low-interest loan can save you thousands of dollars in the long run.
2. Create a Budget
Creating a budget is an essential step in the home-buying process. You need to know how much of your income you can realistically afford to spend on your monthly home payments.
As a general rule, housing expenses should be no more than 28% of your gross income. This includes not only mortgage payments but also taxes, insurance, and other costs associated with owning a home.
You’ll also want to consider your total debt-to-income ratio (DTI) when creating your budget. This is the percentage of your total monthly income that goes toward debts, including credit cards, student loans, and car payments. Your DTI should be no higher than 36% if you want to qualify for a good loan.
3. Save for a Down Payment
Most lenders require a down payment of at least 5% of the purchase price when buying a home. Yet, the more money you put down upfront, the better. Not only will it make your monthly payments lower, but it can also help you qualify for a better interest rate on your loan.
If you’re serious about buying a house, it’s wise to start saving for your down payment as soon as possible. Setting aside even a small amount of money each month can add up quickly. You may also be able to get help with your down payment through grants and other programs.
4. Have a Lender Pre-Approve You
It’s important to know how much you can borrow before you start house shopping. Having an experienced lender pre-approve your mortgage loan will give you an idea of what you can afford and help narrow your search.
Pre-approval also allows real estate agents to focus on homes that fit within your budget. It’s also useful in competitive markets because it shows sellers that you’re a serious buyer and can back up any offers you make.
To get pre-approved for a loan, lenders will need to review your credit, income, and other financial information. So long as everything looks good, you should be able to get pre-approved within a few days.
5. Determine What You Want in a Home
Before you start house hunting, take some time to make a list of must-haves and nice-to-haves. What features are essential? Are you looking for something in a specific neighborhood or school district? How much space do you need?
Be realistic about your list. It’s always nice to have a wish list, but it’s more important to find something that fits within your budget. Try not to get too attached to a certain home before you’ve had the chance to explore all of your options.
6. Investigate Your Real Estate Market
Knowing the real estate trends in an area can be a huge help when you’re shopping for a home. Pay attention to things like average selling prices, how long homes stay on the market, and whether there is an inventory shortage or surplus.
You may also want to look into any potential zoning changes that could affect the value of a property. Investing a bit of time in researching the market can help you make an educated decision when it comes to buying a home.
7. Work with a Skilled Realtor that Knows Your Area
You’ll want to hire a professional real estate agent to help you with the home-buying process. A good realtor will be knowledgeable about your local market, familiar with the neighborhoods in which you’re interested, and able to negotiate on your behalf.
Make sure to interview a few agents before you make your decision. Ask them about their experience, how they plan to market your home, and what sort of services they offer. Picking the right realtor can make all the difference in your home-buying journey, so take your time and find one that you trust.
8. Start Looking at Homes
Once you’ve taken care of the above items, it’s time to start looking at homes (preferably in person). When you attend a showing, take some time to get a feel for the neighborhood and assess the house’s condition. It can help to create a spreadsheet of all the properties you visit and compare them side-by-side.
As you look at different houses, take note of features that stand out, or that could influence your decision. You may want to take pictures or make notes so you can refer back to them when it’s time to make an offer.
9. Consider the Costs of Maintenance and Upkeep
When you buy a house, you become responsible for its maintenance and upkeep. This includes everything from regular home repairs to replacing appliances and systems when they wear out.
If the house you’re considering has been well-maintained and updated, you likely won’t have to worry too much about the cost of upkeep. However, if it’s an older home or in need of some work, plan to set aside some money for any necessary repairs and renovations.
10. Get A Home Inspection Done
A home inspection is another critical step in the home-buying process. A professional inspector will assess the property for potential issues and provide a detailed report. This report can help you identify any red flags that could influence your decision to buy (or not buy) a certain property.
Most real estate contracts include a contingency clause that allows the buyer to back out of the sale if any significant issues are uncovered during the inspection. So don’t skip this step – it’s well worth the cost.
11. Ensure all Renovations are Up to Code
If you are planning on purchasing a newly renovated property, ensure the work was done with a permit. Sometimes, a seller may skimp on getting a permit to save costs, but this could come back to bite you if it’s not up to code.
Be sure to ask your real estate agent or inspector whether any renovations were done with the proper documents. You don’t want to be stuck with a property that can’t pass inspection due to shoddy workmanship.
12. Think Long-Term (What Will the Property Value be in the Future)
When you buy a home, it’s important to think about the future. How will this house be worth in five years? Is the neighborhood likely to increase or decrease in value? Are there any plans for development that could affect your property value?
If you’re buying a home as an investment, these are key questions to consider. If you want your property to appreciate in value over time, make sure to do your research and find a house that has good potential for the future.
13. Negotiate the Price and Terms
Now that you’ve done all your research, you’re ready to make an offer on a home. Try to negotiate for a lower price, if possible, but also consider other factors like closing costs, financing terms, and contingencies.
If you can’t agree on the price, you can always walk away. But if it’s within your budget, then don’t be afraid to make a strong offer and let the seller know that you’re serious about buying the home.
14. Shop for Homeowner’s Insurance
Before you can close on a property, you’ll need to have homeowner’s insurance in place. This is an important step as it will protect you and your bank if something unexpected were to happen to the home.
Shop around and compare quotes from different insurance providers. You want to ensure you’re getting the best coverage for your money, as well as any discounts you may be eligible for. Take note of policy differences between providers so you can determine which one best meets your needs.
15. Finalize the Deal
Once you’ve negotiated a fair price and terms, you can finally close on the house. This usually involves signing lots of paperwork, such as loan documents and title paperwork. Make sure to read over everything carefully before signing anything – it’s crucial that you understand what you’re agreeing to.
Take your time and ask questions if necessary. You don’t want to make any mistakes at this stage, as it could cause delays or complications with the sale.
Once all the paperwork is taken care of, you can finally move into your new home!
The Wrap Up
Buying a home is an exciting and complex process. However, by doing your research and preparing ahead of time, you can make the entire process much smoother and more enjoyable.
At Bayshore and Beaches Real Estate Group, we have years of experience helping people find their dream homes in the St. Petersburg area. Our team of agents is dedicated to finding the perfect home for you while making sure you understand all the steps involved in purchasing a property. Whether you’re looking for an investment property or a forever home, our knowledgeable and experienced agents are here to help you every step of the way.
Contact us today to get started!