Home Buyer Checklist: Have You Done Everything?
Think you’re ready to buy your dream home? Congrats! That’s a big step—and one where it’s wise to know for sure you’ve got all your ducks in a row first. To help you figure that out, here’s an all-in-one home buyer checklist with everything you should make sure you have covered beforeyou set off on your hunt—or, if not, consider this a prime opportunity to get started.
Step No. 1: Determine where you want to live
To focus your house hunt, you’ll need to decide where you want to settle down. If you don’t have your heart set on a particular neighborhood, think about what areas are best suited for your commuting needs, school requirements, proximity to family and friends, and overall lifestyle.
What do you do at night? What do you do on the weekend? Your habits can help you determine where you should live.
Most home buyers begin their house search online by browsing listings or stopping bu at open houses. That might be a mistake for a couple of reasons:
Step No. 2: Find a Real Estate Agent/Broker
First, you might be looking at homes that are outside your price range—and you don’t want to fall in love with a home that you can’t afford. More important: You’re embarking on this quest on your own when you should be letting a seasoned professional guide you through every step of the home-buying process. Bonus: It’s no cost to you as a buyer to use an agent, so you’re getting free advice by using a real estate agent—no strings attached.
Step No. 3: Talk to a mortgage lender
Although some experts recommend buyers do this before finding a real estate agent, there’s a significant benefit to talking to an agent first. You need to shop for a lender locally, and real estate agents know which local lenders are trustworthy and which aren’t.
Therefore, ask your agent for two to three lender recommendations. Talking to multiple lenders will enable you to fully assess your financing options with no obligation to pick until you’ve found one that’s right.
The goal is to get pre-approved for a home loan. To do that, you’ll need to provide the lender with a significant amount of paperwork, including bank statements, pay stubs, W-2 forms, 1099 forms, and tax returns. If the lender decides to offer you pre-approval, you’ll receive an estimate of what size loan you would qualify for and approximately what interest rate you’d get.
Pre-approval is typically good for 90 to 120 days; however, it’s easy to renew it if the borrower’s financial picture doesn’t change.
A good mortgage lender will also be able to help you determine which type of loan is right for you.
Step No. 4: Improve your credit, if needed
When you meet with a mortgage lender, the lender will pull your credit score. Although a perfect credit score is 850, all scores 760 and above are considered to be in the best credit score range—meaning you would qualify for the most competitive interest rates. (For comparison, a good credit score is from 700 to 759, a fair score is from 650 to 699, and a score of 300 to 649 is considered poor.) Your credit score is calculated based on a number of factors, including your debt payment history, debt-to-credit utilization, and length of credit history.
If you find that your credit score is subpar, you may be able to take steps to boost your score. Just keep in mind that you won’t improve a credit score overnight. Indeed, you may need to postpone your house search for a few months in order to mend your credit.
Step No. 5: Don’t damage your credit
When you’re in the process of buying a home, you need to walk the straight and narrow with your finances. Why? Because your loan doesn’t get fully approved until it goes through underwriting—which could take place just a few days before closing. To keep your credit score stable, you’ll want to avoid taking on new debt (e.g., getting an auto loan), opening new credit cards, neglecting student loan payments, or falling behind on credit card payments.