10 Ways to Make a House YOUR Home
Buying a house is a big step. We're by your side when you take it. Keep these points in mind as you navigate the home-buying process.
At CoVantage Credit Union, we'll do everything we can to prepare you for buying an owning a home. When you need accurate information and a clear path, come to us.
Before you consider buying, think about if owning a home is right for you. Being a homeowner requires added funds and time when you are the person responsible for all repairs and upkeep. Also, if you have a job that may ask you to move in the semi-near future, it may be best to rent. However, owning your home allows you freedom to customize your property to your family’s needs and tastes as well as build equity in your investment. Sit down and compare the perks to owning vs. renting before you start to shop. Renting is a relationship, buying is a marriage.
Patience is a virtue.
It may take a while to find your dream home in your price range. If you are currently a home owner, it may also take some time to sell depending on your market. While you are getting to put that for sale sign up, you can still prepare yourself by consolidating your “stuff” and building your curb appeal.
How much “home” can you afford?
Prior to meeting with a realtor, make a budget including payments that aren’t made every month. Be realistic! If the house payment for your dream home doesn’t fit COMFORTABLY into your budget, it may not be the property for you. While analyzing house payments, it’s also wise to be conservative as your financial situation could change in the future. As a rule of thumb, total housing costs should not exceed 33% of your family’s total monthly income before taxes. If your housing budget is higher, consider adjusting funds from other places, saving more, or lowering your expected housing price range.
Be prepared for the upfront costs.
While you are looking at your financial picture, think of how you can boost your savings account. Out-of-pocket costs typically include earnest money, a down payment, home inspection costs (if you opt for an inspection), closing costs, post-purchase reserves, and money for the extras. When budgeting for this round up. You may have money left over after the transaction, but is that ever a bad thing?
Give your credit a makeover.
Buying a house is a big deal, and so are the terms of your mortgage. Visit annualcreditreport.com 90 days before you apply for a mortgage to get free credit reports from all three bureaus. Look for errors that need to be disputed with the credit bureaus as well as collections and any other unfavorable accounts. These should be paid in full at least a month before applying for funding. By cleaning up your credit report, you could save yourself thousands of dollars on interest over the life of your mortgage! When looking at your credit report, lenders typically like to see a credit score above 620, good payment history, stable employment, a comfortable debt-to-income ratio (preferably under 40% including your housing payment), and sufficient assets or savings.
Get your documents in order and apply for pre-approval.
Applying for a mortgage requires lots of documentation. Gather your pay stubs for the last 30 days, two most recent years of W-2s, and two months of statements from all of your financial accounts and assets. If you are self-employed, be prepared to bring your full tax returns for the past two years. Don’t worry, pre-approvals are worth the prep work. A pre-approval is a firm commitment from us stating for 60 to 90 days, you will receive funding for a specified amount. Being pre-approved lets you know your price range and may give you an advantage during negotiations with the seller.
Find your perfect realtor.
Look for recommendations, check qualifications, and interview prospective realtors that specialize in your type of home or desired neighborhood. If possible, try to avoid situations where the agent represents both you and the seller. Above all, expect honesty and trust your instinct. If it seems like a realtor is pressuring you or withholding information, it may be best to find a new agent.
Offering and negotiating with sellers in an art.
Discuss what you’re planning to offer with your realtor and write the offer together. This allows you to have another industry perspective when proposing contingencies, concessions, inclusions, etc. If you don’t ask for something, odds are you won’t get it. That being said, don’t expect anything to be included. If you want that washer and dryer set, it needs to be in writing. During the negotiation, expect some compromise and be willing to meet the sellers half-way. If the sellers aren’t willing to lower the price, you may be able to save money through negotiating inclusions, concessions, and contingencies.
Protect your investment with an inspection.
The inspector you choose will walk through the house and give a general assessment on the “health” of your future home. If your schedule allows, accompany the inspector throughout the house to learn about the property’s strengths and opportunities. Though the lenders usually do not require them, you can use the information found to negotiate new contingencies for your offer.
Still keep your wits about you throughout the closing.
It’s easy to get complacent after your offer has been accepted, but you still have work to do. Even though you don’t technically own the property yet, have homeowner’s insurance lined up two weeks prior to closing. Be extra critical during your final walk-through. If something doesn’t feel right, say so! The day of the closing, get a certified check for all closing costs and carefully review all documents prior to signing. Once you get your copies, keep them in a safe place that is accessible if needed.