Tips for Homebuyers

Jan 28, 2013

Buying a house is the largest financial investment you will probably make, so before you start your search, it's important to get organized and do your homework!

How Much Home Can I Afford?

You’ll first need to determine what’s affordable. Keep in mind, when you’re buying a home, you’ll have upfront costs—down payment, closing costs—and you’ll need to be prepared for these expenses. You can use our Mortgage Calculator to help estimate what you can afford.

What about My Credit?

You should take a look at your credit report before you start the home buying process. This is the time to clean up any past issues and make sure there are no inaccuracies or mistakes. To qualify for a mortgage, you’ll need to meet the lender’s credit qualifications (which may vary by lender but you typically need a minimum credit score of 620). If you’re not in that range, you may need to spend time rebuilding your credit or come up with a larger down payment (i.e., 10% vs. 3.5%).

Where Should I Start?

Before you get serious with your search, you’ll want to find a real estate agent, get your financing in order, and start gathering your financial records (pay stubs, W2s, bank statements, etc.) and have them ready. Have a co-borrower? Their information will be required, too.

How Much Do I Need to Put Down?

Most lenders prefer a down payment of 20%. However, that’s not always feasible for every homeowner. Check with your lender about mortgage programs that may allow for lower down payments. For example, the Federal Housing Administration (FHA) requires as little as 3.5% down. One important thing to note, if you do not make a down payment of at least 20%, you may need to pay what’s called Mortgage Insurance each month until you reach 20% equity in the home.

Am I Ready?

Buying a home is exciting, whether it’s your first house or your fifth, but it’s also a big commitment. And after you’ve closed on your new home, the responsibilities of homeownership are really just beginning. That’s why it’s important to understand all that being a homeowner requires—both now and throughout the life of your loan.

As a responsible homeowner, you’ll have commitments to:

  • Your mortgage company—to pay your mortgage payment on time and in full every month. If you have trouble paying your mortgage or think you might, you're expected to contact your mortgage company for help.
  • Your city/town—to pay your local property/real estate taxes on time and in full.
  • Neighborhood/HOA—to pay for all needed upkeep and maintenance and be a positive asset to the neighborhood and community.
  • Home—to maintain the safety and soundness of your home keeping it insured and in good condition.

If you feel like you can’t make these homeowner commitments, buying isn’t right for you—at least not yet. Maybe you need to save up for a bigger down payment, improve your credit score, or build up your emergency fund…whatever the reason, plan on being a responsible homeowner before taking that next step.

Houses will always be for sale, so don’t rush. Take your time to make sure it’s right for you.

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