Things to do 6 Months Before You Buy A House
Buying a house is more involved than any other type of purchase. Being prepared can remove the complexity and make the process much more fun. If you’re planning to start looking in 6 months, here are some things to start doing right away:
1. Check Your Credit Score.
You actually have 3 scores, one from each of the Credit Reporting Agencies: Transunion, Equifax, and Experian. You can always find out your credit scores by visiting sights like MyFico and ordering your credit report from all three credit bureaus- whether you’re buying a home or not.
Since you’re buying a house in 6 months, the best first step is to get pre-qualified with a lender. The mortgage lender will ask you some questions about your income, debts, etc and then run your credit for you. The reason its important to get pre-qualified before you start looking is that the mortgage lender might be able to make suggestions on things you can do to get a better interest rate when you are ready to buy. Also, they can spot errors and blemishes on your credit report and help you get them all cleaned up before you apply for your loan.
2. Find Out How Much You Need to Save
This will largely depend on what kind of loan you are getting. The down payment will be the biggest amount of money you have to save, and when you talk to the lender they should be able to tell you what types of loans you qualify for. Typically first time buyers will put down between 0%-3.5% of the home purchase price for their first home. Buyers that qualify for loans from the VA will be able to go zero down, but there are also special community redevelopment loans that your lender will tell you about.
Many buyers will use an FHA Loan for their first purchase, which requires a 3.5% percent down payment. If you have the money saved, 10% or more is not a bad idea, but there are lots of options for you if you don’t have it.
Other items you will need to save for include your home inspection, appraisal, sewer line inspection (if applicable), and earnest money. Ask your Realtor what those amounts will be for you.
3. Get Your Paperwork Together
While the paperwork will vary a little depending on the type of loan you get, some items are essential:
- 2 Years of tax returns and W-2/1099 forms
- Paystubs covering the most recent 30 days
- Two months bank statements for each checking, savings, and investment account you have
4. Pick a Realtor and A Mortgage Lender
It may seem strange to start putting the team together 6 months before you are ready to play the game, but finding the right people to work with is going to make all the difference. The Realtor and Lender you work with are going make sure you have all of your paperwork in order and have everything you need. This way, once you start looking you can feel confident about what you can afford, how much you’re going to be paying per month, and how to solve any problems that pop up along the way.
Happy House Hunting!
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