Buying your first home – what to do in the year leading up to your first purchase comes from an article on realtor.com that talks about what to do a year before buying your first home.
There are many things you can do to prepare, both the year before, and the months leading up to your purchase. Using the article as a guide, here is my take on their list:
One year before your planned home purchase:
Find out your credit score. The article recommends annualcreditreport.com – that the three credit bureaus are required to give you a free report annually. In addition, sometimes even your own credit cards may have this option. You can see if there are any errors or issues that you can begin to address right from the start.
Figure out how much you can (and want) to afford. What you “can” afford on paper and what you truly want to spend per month on your mortgage, taxes, etc may be two very different numbers. There are a number of sites that can help you with an estimation of what you can do. I have a few lenders that I work with that offer calculators on their websites!
Figure out a downpayment plan. There are many different loan types out there. Most conventional loans require 20% down, but there are some programs that offer 5-10% down, but add private mortgage insurance. FHA insured loans are another option, with buyers currently only needing 3.5% down, but there may be requirements adding to those loans that could affect you.
I will add to the downpayment plan – you will also need closing cost money. Sometimes a seller is able to pay for some of a buyer’s closing costs, but that is not always the case, or even generally the case, depending on the area. Closing costs are IN ADDITION to the downpayment, so that needs to be added to the amount you are saving up to put down for your home.
Nine Months Prior to your planned purchase:
Figure out your must-haves vs your “wants.” Where do you want to live? What must the house have? What would you like, but would be willing to forgo to live in a certain location?
Start searching homes online. For Baltimore homes, I can set up a search specific to your wants that will come directly from our local multiple listing service. Our local MLS, MRIS, has its’ own website, www.mrishomes.com. There are no ads, no high-pressure sales on the site – just pure data fed directly from the local MLS.
Budget for expenses and maintenance. In addition to those closing costs, there are inspections, insurance, potential for needing to buy appliances. Once you buy your home, too, there will be maintenance issues, so start saving for those expenses!
Six Months before your planned purchase:
Get your paperwork together for your loan. There will be a LOT to get together. And even once you get it together, they will ask for more. And more. And, well, even more. They will need your tax paperwork, your pay stubs (and will need updated ones throughout your loan process,) credit card and loan statements, bank statements, any documentation you may have on any large deposits or withdrawals on any bank accounts you have, any brokerage account statements, any retirement account statements, and any address where you’ve lived in the last 5-7 years. This is just a short list. Your bank may ask for much more, just know these are the types of details they are going to need.
Find Your REALTOR(R) and Lender! In Baltimore, Towson, Timonium real estate, I am here! I serve around the Baltimore real estate area. I also have a network of lenders I can refer you to, who can help you determine the best loan type and program to go with – and can also give you a clear understanding of how much of a home you can afford, and what your closing costs will be.
I can sit down with you to discuss the buying process, and figure out what areas might be of interest to you, and narrow down where you may want to live. We can set up or narrow down your MLS search to get daily updates when there are new listings or updates to those currently on the market in your areas of interest.
Three Months before your planned purchase:
Get pre-approved. (If you haven’t already!) A pre-qualification and a pre-approval are two different steps.
Start looking at homes!
Two Months before your planned purchase:
Make an offer on a home! I can help you understand the process, help you do the paperwork, and help guide you, if I am your Baltimore real estate agent. Often, it can take 4-6 weeks for a contract to close, and there sometimes can be a delay, so keep that in mind when you are making an offer and setting move dates.
After your offer is accepted, you will most likely need to have inspections! Depending on the house, it could potentially include a home inspection, mold, termite, chimney, radon, well, septic, environmental, or any other inspections that you deem needed and that you and the seller may have agreed to in the contract.
Within The Month before your planned purchase:
Get all/any outstanding loan requirements/requests to your lender as quickly as possible!
Get homeowner’s insurance! You will need it in place prior to closing, and your bank will need proof of insurance before closing before they can close on the home. Make sure to look into this with plenty of time before closing.
Do a final walk through. Check to ensure agreed repairs were done, and that the house is in the condition you and the seller agreed.
Wire the money you need to bring to the closing company. Your closing company should have given you instructions. This should be done most likely a few days before closing, to ensure the money is there by the time of closing. There are some wiring scams going around, we have had them happen here in the Baltimore area. Once you get wiring instructions from the closing company, CALL them at the main phone number (not an extension or cell #, the main line for the office) to confirm the instructions.
Go to closing, and yes, you can be nervous, but hopefully excited!
There are many moving parts in the process of buying a house. This is just a basic list and outline. Having a professional help guide you through the homebuying process can be very useful. For Towson real estate and the surrounding areas, please contact me. I would be happy to help!