How to Prepare for Homeownership
Buying a home is a big decision, both financially and emotionally. It’s important to make sure that you take the necessary steps to make sure you are prepared to buy a home. The reality is that the process of buying a home begins before you ever speak with a realtor or apply for pre-approval for a mortgage. For many people, the process begins at least a year before you actually buy a home, and there’s a reason for that. You want to make sure you’re fully prepared before taking this next step in life, and we’re committed to making sure you’re prepared for the journey of homeownership.
Understand the Expenses of Homeownership
The financial responsibility of owning a home goes beyond saving for a down payment. As a homeowner, you will be responsible for all other home-related costs, including:
- Paying your mortgage on time. When you buy a home, you are making a financial commitment to your lender to pay your mortgage on time and in full every month.
- Home repairs and maintenance costs. You’ll need to account and save for the time and money you will spend on routine home maintenance.
- Other housing costs. Your budget should include additional costs such as homeowners insurance, property taxes, and unexpected emergencies.
Make Sure Your Finances are in Order
Before you can start house hunting, you’ll want to get a firm handle on your finances.
- Keep an eye on your credit score. Your credit score is key to getting a mortgage and is one of the factors lenders use to determine your interest rate and loan terms. You can check your credit report for free at AnnualCreditReport.com one time per year. It’s important to review your report to ensure there are no discrepancies or errors that could affect you getting approved for the best mortgage loan.
- Set a budget. You can determine if you are financially ready for homeownership by creating a budget that keeps track of how much you earn, spend, and save each month. You can adjust from there to save additional funds for expenses of buying and owning a home. You can also use our Mortgage Payment Calculators to determine how much you can afford for your monthly mortgage payment based on your current income and expenses.
- Save for upfront costs to buy a home. You’ll need to make sure you have enough funds saved up for your down payment, closing costs, and other upfront costs that come with purchasing a home. If you’re trying to save, you may want to consider setting up automatic transfers from your checking account to your savings. This will help to ensure you don’t accidentally use the funds you’re trying to save and they are moved before you can even miss them.
Gather Your Documents
When preparing to buy a home, your mortgage lender will require several pieces of documentation from you, including both personal and financial records. These will help them determine your eligibility for a mortgage loan. It’s helpful to get these documents organized as early as possible:
- Recent paycheck stubs
- W-2 forms
- Statements from all bank and investment accounts
- Statements for all outstanding debt
- Tax returns
- Proof of supplemental income
Find Your Homebuying Team
The great thing about the home buying process is, you don’t have to navigate it alone! A trusted team of industry professionals can help you on every step of the journey as well as try to help you find areas where you can save money.
- Your real estate agent will be with you through every step of the process to help you find a home that meets your location, size, and price needs.
- Your lender will evaluate your credit, finances and employment information to determine if you qualify for a mortgage and help you secure the best financing option.
Get Pre-Approved for a Mortgage Loan
Once you’ve gone through the necessary steps to understand your home buying budget, collecting your important documents, and selecting your home buying team, you’re ready to get pre-approved for a mortgage loan. Your lender will be able to tell you the maximum amount you’re qualified to borrow. Keep in mind that you only want to borrow what is comfortable for you and within your budget, making sure not to over extend yourself.
The Next Steps
If you think you’re ready for homeownership, we are here to help you through every step of the home buying process!
- Apply online or make an appointment to speak with our mortgage experts to help you get started
- Read about what to expect at your mortgage closing to give you some insight on what will happen once you find your home.
At Robins Financial Credit Union, our mission is to enhance the financial well-being of our members and community. We honor this commitment by providing educational content to help you make the most of your finances. Read our other blog articles to help you gain the financial knowledge you need to succeed.