Before you start shopping for your property, it is a good idea to make some preparations.
Preparing to buy a house is an important and exciting process. Here are some essential steps to help you get ready:
- Assess Your Finances: Start by evaluating your financial situation. Determine your budget, including how much you can afford for a down payment and monthly mortgage payments. Check your credit score and review your credit report for any discrepancies or areas to improve.
- Save for a Down Payment and Closing Costs: Aim to save for a down payment, typically ranging from 3% to 20% of the home’s purchase price. Additionally, factor in closing costs, which can be around 2% to 5% of the home’s price.
- Get Pre-Approved for a Mortgage: Contact lenders and get pre-approved for a mortgage. This will help you understand how much you can borrow and provide you with a competitive advantage when making an offer.
- Research Neighborhoods: Research different neighborhoods that interest you. Consider factors like proximity to work, schools, amenities, safety, and property values. Attend open houses to get a feel for the areas you are considering.
- Identify Your Must-Have Features: Create a list of features and preferences you want in your future home. This will help you and your real estate agent narrow down potential properties that align with your needs.
Build Your Green File.
A green file contains all your important financial documents. You will need it to secure financing for your property. The typical green file should contain:
- Financial statements
- Bank accounts
- Credit cards
- Auto loans
- Recent pay stubs
- Tax returns for two years
- Copies of leases for investment properties
- 401K statements, life insurance, stocks, bonds, and mutual account information.
Check Your Credit Rating.
Your credit score will have a huge impact on what type of property you can buy, and at what price. It is first recommended to check your credit rating with an experienced lending institution so that we can determine what you can afford. The lender will research your credit ratings from the three credit reporting agencies Equifax, Experian and Trans Union. We will be happy to recommend experienced, knowledgeable lenders in the residential, construction, and commercial and investment real estate fields.
Be Careful With Your Finances.
Now is not a good time to make sudden career changes or large purchases. You want to approach your property purchase from a position of financial stability.