Six Steps to Take Before You Begin Your Home Search
Thinking of buying a home? Here are six steps to take before you begin your home search….
1. Evaluate Credit Score and History
Your credit score is one of the biggest factors that will determine whether or not you can purchase a home.
Mortgage companies don’t just consider the number, they look at your entire report to see your complete credit history. Obtain a copy of your credit report so that you can review your score and ensure the information is accurate.
If your score falls below the minimum required to secure a mortgage, don’t panic!
There are steps you can take to raise your score and qualify.
This is a great time to get advice from a housing counselor. A counselor can go over your report with you line by line and give you advice as well as an action plan so that you can raise your score in a timely manner and start searching for your home.
2. Determine how much you can pay up front.
Purchasing a home almost always requires a sum of money up front. A down payment is usually the biggest expense but there are also other up-front fees that add up, including:
- Closing Costs,
- Inspection Fees,
- Homeowners Insurance,
- Moving Costs
Determine how much money you can spend to cover all of these and use that as a starting point when considering what you can afford.
If a down payment seems out of reach, consider looking for programs that help buyers achieve homeownership. NeighborWorks of Western Vermont has a Down Payment Assistance Loan that offers up to $40,000 towards a down payment on a home.
Don’t forget about after closing costs as well! Many times you may find a home that will need some immediate repairs or modifications. Build that into your estimated costs as well so you won’t be hit with surprises after you have made your purchase.
3. Make a monthly budget
If you’ve done your homework and determined that you have enough saved for the up front costs of buying a home, you need to figure out how much of a mortgage payment you can make each month. If you’re paying rent now, you probably have a ballpark figure in your head.
Here are some questions to ask to help formulate an accurate monthly payment:
- Do you pay utilities now? How much more will utilities cost per month?
- How much are property taxes?
- Can you afford to pay a little more every month to increase your investment or get more room?
- If you move will this affect your transportation costs for work/childcare/school?
- Will you need to purchase equipment to maintain your new home (lawn mower, ladders, snow blower, tools, etc.)?
Understanding that being a homeowner will incur different costs from being a renter will help you determine just what you can afford to pay every month – and this will help you find your price range when you begin searching for a home.
Once you’ve figured out the details of affordability and cost, the next step is determining what home is best for you.
What to Buy, Where to Live
4. Figure out What Kind of Home Suits Your Lifestyle
There are many types of homes and, while some choices are purely for style or desire (you’ve always wanted a porch!), there are others that can determine the comfort and sustainability of homeownership.
- Do you travel a lot?
- Do you work from home?
- Do you own a car or rely on public transportation?
- How many people will be living in the house with you?
- Do you want to be able to rent part of your home?
- Is accessibility an issue? Do you need one floor?
Take the time to determine what sort of home is best for you before you begin your search. Don’t waste your time looking at something that won’t fit into your lifestyle. If your search is focused, you are more likely to find the home that suits you sooner than later.
5. Decide on Your Ideal Location
You can make changes to your home, but not to its location. Where you buy should be just as important a factor as what you buy!
- How flexible is your location choice?
- Is it possible for you to move to a different area and afford more house, or does transportation and time limit your choices?
Look at a map and determine which areas make the most sense for you.
Remember, location can affect your bottom line.
If you make a choice of location that could increase or decrease your cost of living, adjust your budget to incorporate those new numbers into your monthly expenses.
It’s helpful to make a list of wants vs. needs. Write it all down so that you have a clear picture of what you’d like, as opposed to what you must have, to make homeownership work.
6. Begin Your Home Search
You’ve done your homework, you know what you can afford, how you’re going to pay for it, and what sort of home you would like to buy – now you can really begin looking!
If you’re looking in the Rutland, VT area, please take a look at our offerings at RealtyWorks, we’ve got some great homes on the market and our experienced realtor can help you find what you are looking for.
Bonus Points: Cost, Budgets, Fine Print, and an Opportunity
How Does It All Work?
Knowledge is power, and that statement could not be more true when it comes to real estate purchases. The more you know, the better equipped you will be to determine fair pricing, what you can afford, and how you are going to prepare yourself to own a home and pay back a mortgage.
NeighborWorks of Western Vermont offers Homebuyer Education Classes that cover a wide array of topics that will help you understand the steps necessary to purchase a home.
If you aren’t close to an education class, take the time to educate yourself using trusted online resources. We offer our Homebuyer Education Class online as well as in person and NeighborWorks America offers free finance and home tips that are a great way to get started!
Want more info about how our Homebuyer Education classes can really help?
If you are just beginning your search and have questions about how to get started, please give us a call or fill out our contact form. We are part of NeighborWorks of Western Vermont and we can help you access the resources available for education, loans, and homeownership counseling.