Buying a New Home: How Should I Prepare?
Everyone wants to begin looking at homes and dreaming about where they might live in the future. But there is some preparation involved to make sure you’re truly ready to buy a home.
If this is your first time buying a home, knowing where to start can feel overwhelming, and you may not know the best path forward.
We can help.
At Chris Doering Mortgage, we help homebuyers find their dream homes and get the financing they need to make it happen. Today, we’ll help you understand the most important steps you need to take before you begin the fun part of searching for your next home.
5 Ways to Prepare for Buying a New Home
When working with new homebuyers, there are five steps we recommend they take to get the best rate and get the most out of the whole home-buying process.
1. Strengthen Your Credit Score
Getting the best interest rates available will depend largely on your credit score. A credit score of 700 or more should get you a good rate, while a score over 750 should allow you to get some of the best rates available. If you have a lower score, you might want to spend some months raising it before beginning the home-buying process.
One good idea to help your credit before buying a home—don’t apply for a new line of credit within a year before applying for financing.
2. Know What You Can Afford
One general rule of thumb when purchasing a house is that you shouldn’t spend more than 30% of your monthly net income on housing, but this is far from exact.
If you’re not ready for the pre-approval process, one way to figure out a ballpark figure that you might be able to afford is a mortgage calculator. It can produce what you would expect to pay monthly on a house, but it still depends on the net monthly income for the person or people purchasing the house.
If you want to create a budget, you can use our mortgage calculator tool here or read more about mortgage calculators to understand how they work and how they can make the process easier for the buyer.
Don’t forget about closing costs, either. These can sneak up on buyers in the end, so it’s best to plan ahead and start saving so you have the money already on hand.
3. Understand Which Loan Works for You
Unless you qualify for a VA loan or are taking out a large home loan, there are typically three loan types available to you: a conventional loan, an FHA loan, and a USDA loan. The conventional loan is the most common and straightforward loan type, and most lenders will end up with this type of loan for their new home. However, there are two other loan types that you could qualify for:
- The FHA Loan: A loan type that helps make home-buying more accessible through less strict debt-to-income ratios and credit score requirements. They also allow you to put less down on the home.
- The USDA Loan: A loan type that allows low- to moderate-income families to buy a home in rural or suburban areas. While there are more requirements around this loan, it’s a great way for people to buy a home in more rural areas.
Before you begin the home-buying process, you’ll want to explore your options to determine if there’s a specific loan you think would work best for you and your family. A mortgage expert, like the ones at Chris Doering Mortgage, can have preliminary discussions with you to help you decide what you may qualify for and which loan fits your financial goals.
4. Work with a Trusted Real Estate Agent
Choosing your real estate agent is an important decision in the home-buying process. Your real estate agent does more than just show you homes. They can negotiate on your behalf and even have access to homes you won’t find on the market yourself. A good real estate agent can save you time, money, and stress by helping you navigate the home-buying process with a knowledgeable guide.
5. Get Pre-Approved with the Right Lender
Starting to shop for homes without being pre-approved can lead to disappointment in the end. It’s best to start with the pre-approval process, figure out how much you can comfortably afford, and then begin looking with a pre-approval letter in hand. Ignoring the pre-approval process means you can get excited about houses for sale that you might not actually be able to afford.
The pre-approval process goes through a preliminary credit review and credit check to let you know how much you can afford to spend on a house. It can also give you some leverage during the negotiating process when you find the home you want because it shows the seller that you are financially capable of buying the home.
Find Your First Home with the Help of Chris Doering Mortgage
No matter your experience, Chris Doering Mortgage can walk you through the home-buying process, starting with the very first steps to the very end. We can help you get started with pre-approval for home-buying and explain every step along the way. Call us at (352) 244-0840 or send us a message from our website to begin your journey to your next dream home!