Purchasing a home is one of the most important financial decisions most people ever face. Simply put, buying the right home at the right price can build the foundation of your family’s wealth for generations to come. So, here are some things to do before buying a home.
Sounds like a lot of pressure, right?
There is also a lot of new terminology most buyers must learn when purchasing a home.
Closing costs? Mortgage insurance? Escrow? Buyer commission rebate?
What does it all mean?
Every buyer will eventually learn what each of these terms means, but before potential buyers need to learn more complex terms like buyer commission rebate, they need to focus on the basics. Here are a few things every buyer needs to do before they start hunting for the home of their dreams.
1. Know your credit score and review your credit report.
Had a late car payment a few years ago? Were you forced to do a debt consolidation after unexpected medical expenses? What about your credit cards? Do you use them too frequently? Do you use them too infrequently? A history of making late payments can be a deal breaker when applying for a mortgage.
No matter what your credit report contains, make sure you are aware of any negative credit history before applying for a mortgage. There is a decent chance that there are mistakes on your credit report that can be fixed. Whatever you do, don’t learn about a bad credit score or mistakes on your report from a potential mortgage lender.
2. Learn more about the process of applying for a mortgage—and get preapproved for one before looking for a home.
Visit a site like Transactly, and you’ll be paired with the real estate professionals you need.
First, you need a mortgage lender that’s right for you. That lender may be the bank you use for your other financial needs, or it might be an entirely different institution. Transactly can help you with that. After you’ve found the right lender, get preapproved for a mortgage so you know exactly what your house-buying budget is.
Once you’re preapproved, you’ll know if that two-car garage is even a realistic option.
3. Determine what your needs and wants are for your next home.
Speaking of that two-car garage, do you actually need a two-car garage?
What about that third bedroom?
When it comes to purchasing a home, it is very easy to confuse wants and needs. You may genuinely need three bedrooms, because while your four-year-old son and two-year-old daughter can share a room now, that won’t be the case when they are sixteen and fourteen. In that case, a third bedroom is a must-have.
The granite countertops, on the other hand, will likely remain a nice-to-have.
Ultimately, the buyer determines what qualifies as a need and what qualifies as a want. However, it is important to prioritize needs and wants before you start looking at actual homes. Doing so will help prevent mistaking wants for needs and potentially buying the wrong home for the wrong reasons.
Purchasing a home is complex, and like we said, you’ll learn all sorts of new words and terms in the process of buying your house. But before you start learning about the benefits of buyer commission rebates, you need to tackle the basics.
Know your credit report. Get preapproved for a mortgage with the right lender. Know what you need and what you want in your next home. Then, start looking for the house that fits within your budget. These are the things you need to do before buying a home.