Home Buyer's Guide
For the majority of people, purchasing a home is the largest purchase one can make, and it can feel scary. It doesn’t have to be, in fact it should be fun. Purchasing a home is a sign of independence, it’s starting a new chapter in your life. Working with a Realtor® you feel comfortable and trust is extremely important. This guide will help reduce anxiety, and help you prepare and enjoy the homebuying road ahead.
Prepare a monthly budget, it won’t take long. Figure out what you normally spend each month on various items. Even though not everything in your monthly budget will be considered for your home loan (if you’re planning to finance your home purchase), knowing your monthly budget will show you what you TRUELY can afford to spend, and you can see where you could free up some money if needed. This will prevent you from being “house poor” or feeling regret after your purchase.
Feel free to use this simple budget sheet that I’ve used for years. HERE
Do a quick credit check on yourself and address any issues. Any and all collections on your profile will need to be explained and/or paid off in order to obtain a mortgage.
This is also a good time to do other things to improve your credit profile. Applying for a credit card limit increase as long as they won’t make a hard pull on your credit file (not all credit card companies offer this so be careful), or update your income with them and they may automatically increase your limit. This will increase your credit score by decreasing your DTI (debt to income ratio).
Paying off debt it not necessarily going to help. In order for it to have a significant impact on your credit score and DTI, the balance you’re paying off would need to be large. Best to hold onto your cash for the deposit, buying points, and closing costs, things like that.
**Do not open any new lines of credit within 3-6 months of applying for a mortgage, some lenders are finicky with this, if you have already make sure it’s a good reason, they bank will want to know why you opened it**
Keep your monthly purchasing to normal stuff, avoid large uncommon purchases till after your closing. Your lender will want to see at least 1 bank statement, and they will question outliers.
If you’re planning to receive funds from a family member to help with financing and/or down payment, start documenting it ahead of time so the money trail is easily followed, the lender will want to see this.
All that's left is to move in!
(Unless you're selling a home too, then you should check out my sellers guide!)
