How to prepare during the 9 months leading up to the purchase of your new home.
Wide-eyed and bursting at the seams with optimism, you decide it’s time to move on up.
How hard can it be? I’m an adult. I actually enjoy getting socks for my birthday. I’m ready.
Far too often, first-time homeowners quickly face the reality of how outgunned and unprepared they truly are. At Verity, we put our years of experience to work in order to make your home-buying process easy and stress-free.
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9 Months Until Closing Date
Check credit score. Whether you choose to have your credit score checked by your personal bank or through a credit check website, such as annualcreditreport.com, it is extremely important to make sure your credit score is correct and free of mistakes. According to the Federal Trade Commission, 1 in 4 Americans identify errors on their credit scores, and 5% of these errors lead to an increase in interest rates.
Determine How Much You Want To Afford. It’s important to ask yourself how much you want to afford, not how much you are able to afford. Being house poor is stressful and makes for an unpleasant home owning experience. Lenders tend to look for a total debt-to-income (debt includes future mortgage and any other debts) ratio of 43% or less. Take advantage of our mortgage calculator to determine your estimated future mortgage cost.
Develop a down payment plan. As you are saving up for your down payment, remember that most banks prefer proof of a stable income for 60 to 90 days before applying for a loan. As you monitor your debt-to-income ratio during this period, make sure your down payment will allow for a mortgage with realistic, and practical, interest rates and monthly payments.
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6 Months Until Closing Date
Begin researching neighborhoods and attending open houses. This is where the real fun begins. Our home finder app is a great starting point to discovering the perfect community and home style for you. Looking for open houses to visit? View our updated list of open houses in your area to get an idea of price points and what features are a must have in your new home.
Start a home maintenance fund. All homeowners face maintenance expenses. By putting a small amount away each month into a maintenance account, you will have peace of mind when these inevitable expenses arise. For increased peace of mind, we offer homebuyers a variety of warranty options to cover unexpected maintenance needs.
Research potential lenders and realtors. Begin researching lenders who specialize in home loans, specifically first-time home buyers. Unlike banks, which only offer its own products, mortgage brokers have the ability to shop for competitive loan rates among multiple lenders. It is also the time to find the right buyer’s agent for you. They will be your sherpa through the searching and closing process.
Paperwork Checklist For Lenders
- W-2 Forms
- Personal tax returns for the past 2 to 3 years
- Most recent pay stubs
- Bank statements
- Addresses for past 5 years
- Recent, if any, retirement accounts
- All current debt information
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3 Months Out
Loan pre-approval. You’ve found a lender, you have all finances established, and your necessary paperwork is complete. Make an appointment with your lender, or mortgage broker, and find out how much you are approved for.
Note of advice: To avoid the woes of being house poor, borrow less than the maximum allowed.
Time to shop. You’ve been approved, you’ve done your homework on price points and preferences, and the time has come to find the perfect home to fit your lifestyle. As mentioned above, our home finder app allows you to narrow down homes based on price, community, and style.
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Last 2 Months
Make offer. You’ve found the home of your dreams. Make an offer and prepare to call yourself a homeowner
Get insurance and/or warranty. Don’t forget to secure homeowner’s insurance before closing, and make sure to consider signing up for our warranty plan.
Final walkthrough and celebration! Set up a final walkthrough to make sure your home is in the shape you were promised. Once everything is settled, celebrate with family and friends! You are a homeowner!
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