Steps to Buying a House: Checklist & One-Year Plan For Home Buyers
All of us dream of buying a house one day. If you are in a habit of making your dreams come true, this is one dream you can achieve if you plan properly by managing your personal finances. As easy it is to say you are buying a house, it actually needs a lot of pre-planning, starting almost a year before you even look for a house. So you better start well before time. Go through the following checklist before you start looking of a house.
A Year before Buying
Get Your Credit Reports Checked and Sorted
Credit score not only help you in getting the mortgage; it also determines the interest rate you will have to pay on your mortgage. Get your credit reports and check for accounts that are not yours and debts that you don’t owe. Sort out payments that you have already made but still shows outstanding on your report. Work out on improving anything negative on your credit.
Work on Improving Your Credit Scores
In order to get low mortgage rates, start getting your personal finances sorted. Pay off your bills well on time and start repaying any outstanding loans. Use other ways to improve credit scores when possible. Also, arrange to get a credit-monitoring service started up in order to avoid wrong credit scores.
Time to Start Saving Up
Now, you may start saving up your money in any way possible. Get frugal, save money on anything you can. Stop getting take-outs, give up your subscriptions and avoid shopping. Think about being a house owner! Try to get 10% of your down payment covered to get better financing options. You can always use some extra money for setting up a new house.
Start Taking the Deadline on Your Bill Seriously
If you keep missing deadlines on your bills, that is what makes a dent in your credit scores. Start remembering to pay your bills on time and if you keep forgetting, look for automated billing options, online or otherwise.
Six Months to Go
Take a Crash Course on Mortgages
You should understand properly how mortgages work. It is better to make an effort now than to be stuck with a life-long mortgage due to wrong advice. Find out about different types of mortgage options available and learn the risks involved in them. Try sticking with the traditional mortgage.
Make a Budget; Determine Costs That Are Associated With Moving
If you are buying a house, the down payment and mortgage is not the only thing you will be paying. There will be cost of decorating the house, taxes and insurance to pay and association fees to be sorted. You will also face higher utility bills, and you will have to take up repair and maintenance costs as well. So now is the time to study your personal finances and make a budget.
Time to Save More Accordingly
Now that you actually know the amount of money you will need, start saving money accordingly. The more you save, the better options you will have at the time of closing the deal for your house.
Three Months Remaining
Work On Making Your Credit Better
Minimize your credit utilization so that there are lower risks for your credit score. Pay your balances before deadlines. Wait until buying the house to open or close any credit accounts.
Two Months Out
Get an Idea of Mortgage Rates
Get your credit report once again and keeping in view your current credit scores, ask a few lenders to provide you with mortgage rates. Don’t apply for the mortgage yet, just get an idea. The inquiry by lender will lead to a dent in your credit score but inquiries within a few days are considered as one so approach the lenders in a closely concentrated time-period.
Obtain a Pre-Approval Letter
On the basis of your credit score, ask the lender to give you a pre-approval letter of your mortgage. The seller often demands for this letter before negotiating on offers.
Mortgage Broker and Real-Estate Agents
If you find it hard to understand the mortgages, hire an experienced mortgage broker before shopping for mortgages. Also start looking for real estate agents in the neighborhood you want to move to and look for suitable houses.
Time to Get Your Dream House
Shop for a Mortgage
Once you select a house and make an offer, Shop for mortgage. Do your researches properly, ask people for advice and select the lender carefully. Try to move quickly after making the offer, since it takes time to get the mortgage approved.
Appraisal & Inspection
Arrange for an appraisal of the house and inspect the house thoroughly before closing the deal. A walk-through is advisable 24-hours before closing in order to check whether the agreed-upon repairs are made or not. You will also need to prove that you have homeowner insurance to lenders at the time of closing.
Closing is when the paperwork is signed and the money is paid. Check in advance, the amount of money you need to pay at closing including down payment and your share of legal fees, taxes, insurances and paperwork costs.
Congratulations on having your dream house!
The above article is composed and edited by Donna B. who writes articles related to debt settlement services from Consolidated Credit. In her free time she writes articles related to finance, loan, dongle, internet technology, mobile applications etc.