What You Can Do NOW to Prepare for Buying a Home LATER
It feels nearly impossible to know when the “right” time is to buy a new house or sell your current house (or both). As I’ve chatted with buyers and future buyers, I’ve noticed a common theme and thought I would put what I know about real estate and the home buying process in a blog post to hopefully help future buyers navigate the process. Buying a house is one of those things where you don’t know what you don’t know which is why it is that much more important to work with a realtor!
If you’re planning on buying a home within the next 6-12 months, I would recommend you do the following:
Chat with a lender (I can get you connected with a trusted LOCAL lender). Even if you’re not ready to get pre-qualified just yet, you can at least get a good idea of what your financial situation is. A lender can offer tips to get you headed in the right direction so you’ll have your ducks in a row whenever the time comes to begin the home buying process!
Depending on how that conversation goes, you can then start working on building your credit score and/or paying off debt to ensure your DTI (debt-to-income) ratio is where it needs to be. This is how much money you’re bringing in each month compared to how much you’re having to spend to pay off debt such as student loans or a car payment.
SAVE! As I’ve mentioned in previous blog posts, the amount you’re required to put down varies depending on which type of loan you end up going with/get approved for. If you’re wanting to avoid having to pay PMI (private mortgage insurance), you can put 20% down. That is personally what I did! However, everyone’s situation is different. If you do end up getting a loan, there will also be closing costs that will have to be paid on top of your downpayment. Some sellers are willing to pay those for you, but I wouldn’t bank on that. The more money you can save, the better position you will be in to make a competitive offer that also allows you to be in a healthy spot financially when it comes to your monthly mortgage payment!
Research neighborhoods and try to get a good idea of WHERE you’d like to buy a home. This will help you understand what homes are selling for in your desired area/neighborhood so you can plan accordingly! Home prices will vary depending on the location of the home. Some school districts have higher taxes and higher sales prices. If you have kids, you need to make sure you’re falling in love with a home that is in your desired school district.
Get pre-qualified once you’re ready to buy a home (and after the above has taken place). This step is a requirement in order to look at houses because you need to how much house you can afford, what your monthly payment needs to stay under to ensure you’re not house broke, and what type of loan you qualify for. Once you have this letter in hand, you’ll send it to your realtor who will add it to your file and then you can officially start looking at houses in person!
There are also documents you’ll need to provide the lender when that time comes, so I did my best to put together that list so you know ahead of time what your lender will need:
paystubs for the last 30 days
year-to-date profit/loss statement and balance sheet (if self-employed)
bank statements
driver’s license or government-issued ID
W-2’s and 1099’s from the last 2 years
federal income tax returns from the last 2 years
lease agreement if currently renting + last 2 years of rental history
As a side note, the quicker you can provide the lender with these documents and any information they request, the quicker you will get pre-qualified and the quicker you can go look at houses in person!
Kristin Koonce Burroughs, REALTOR®
(903)241-2608
kristinkoonce@gmail.com
BOLD Real Estate Group
