How to Get Ready to Buy a House
Homebuying is a multi-step process. If you have never owned a home before, first on your to-do list when buying a house should be to set realistic expectations for yourself and anyone else who is buying the home with you. Know that finding the right home may take time. Understand that there will be some items on your homebuyer’s checklist that you will be unfamiliar with. You may want to consider using a realtor, who is a knowledgeable expert in the process, to help you get the best results. More on that later.
It can be exciting, but also overwhelming to know where to start or what to do when buying a home for the first time. When you’re ready to get started, here are some of the initial items to put on your checklist before buying a house.
Homebuying Checklist: Assess Your Financial Health
Savings. One of the first things to do before buying a house is to take a look at your finances. How much do you have in savings? You will need a down payment of anywhere from 3% to 20% in order to buy a house. If you don’t have much saved, put building your savings account on your list of things to do before buying a house.
Debt. Determine if you have any debt (e.g. outstanding student loans, credit cards, car notes, etc.). In order to get a home mortgage, lenders will look at your debt to income ratio. The lower the number, the less risk you pose to lenders and the more likely you are to get a loan. Lenders like to see a D/I ratio of 36 or less but it’s possible to be approved with numbers up to 43 or so.
Credit Score. You will need a credit score of about 620 to get a conventional loan to buy a house, and a score of approximately 580 to get an FHA loan. You can get your credit report and score from one of the credit bureaus (TransUnion, Equifax, or Experian) at no charge, once a year. If you have any delinquent debt, be sure to take care of it or work out a payment plan with your creditors if necessary. Work with the bureau to correct any inaccuracies on your credit report.
Homebuying Checklist: Set a Budget
Now that you have evaluated your finances, the next item on your buying a house checklist is to determine how much you can afford to spend. A good rule of thumb is that your monthly mortgage payment (principal, interest, taxes, insurance, and mortgage insurance) should not consume more than about 28% of your gross monthly income. Look for a home affordability calculator online to help you determine how much house you can afford based on your income and expenses.
Homebuying To-Do List: Mortgage Pre-approval
Next on the checklist for buying a house is to research options for a loan and get pre-approved. Most consumer banks and credit unions offer home mortgages and there are numerous mortgage brokers online. If you are working with a realtor, they will be able to give you some ideas as well.
Homebuying To-Do List: Realtor or No Realtor?
A very important item on the homebuyer’s checklist for buying a home is to decide if you will use a realtor. Some buyers who purchase a home in a master-planned community visit a model home and then work with their chosen builder’s agent throughout the transaction. The important thing to know here is that the builder’s agent’s primary responsibility throughout the process is to the builder, first and foremost.
Other buyers choose to bring their own realtor to a master-planned community. The advantage of bringing your own realtor is that your agent will assist you with the purchase of any home in any location and is there to represent your interests only. Note that most builders will pay a buyer’s agent’s commission if you let them know you have a realtor up front.
Homebuying To-Do List: Determine location
Even if you’ve already decided to live in the Dallas-Fort Worth Metroplex, the greater Austin area, or the Houston, Texas metropolitan area, you still have many, many location options to consider. Do your new home dreams involve an urban, suburban, or rural home? Those who work in a traditional workplace will want to consider commute times; those who enjoy the freedom of telecommuting have even more choices.
Buying a House Checklist: “Must Haves” & “Deal Breakers”
This item on our checklist for homebuyers actually involves making a list! Really, it’s two lists. First, jot down essential features that your new home must have. These will be items such as:
- Number of bedrooms
- Number of bathrooms
- Desired square footage
- Number of stories
- Move-in date
- School district requirements
Next, make a list of the items that you absolutely do not want in your new home such as:
- Primary bedroom on the second floor
- A pool
- Corner lot
If you are buying a house with a spouse or partner, be sure you have consensus on your lists so you can exclude any homes that won’t work for everyone.
Find a Master-Planned Community
Many couples, families, empty nesters and retirees have discovered the beautiful homes and wonderful amenities available at Hillwood Communities throughout the state of Texas. Our developments offer quality homes in beautiful, walkable neighborhoods and are conveniently located just outside major cities of Dallas, Fort Worth, Austin, and Houston. Hillwood’s five Live Smart communities create a dynamic lifestyle centered on similar values and shared experiences. Visit a Hillwood Community to learn more or contact us today.