Preparing to buy a house

Thinking about buying a house in the future? Here’s where you need to start.

1 Year + Out from projected closing date:

1. Check your credit score

   1. Dispute and correct any inaccuracies

   2. Paydown debt 

      1. Get Debt To Income Ratio (DTI) below 43% of your gross income

   3. Boost credit score - 

      1. Pay bills on time consistently

2. Start Saving

   1. Think down payment and closing costs (typically between 2 & 5 percent of purchase price)

   2. You can utilize your retirement savings

   3. Create a budget and stick to the plan

   4. Most FHA loans require 3.5% of purchase price as a down payment

3. Calculate how much home you can afford

   1. Create a monthly budget

      1. Start by plugging in your monthly income

      2. List ALL your monthly recurring expenses

         1. Rent payments

         2. Utilities

         3. Car payments

         4. Student loan payments

         5. Credit card payments

         6. Etc.

   2. Breakdown any quarterly, biannual and annual payments and break those down to reflect a monthly cost amount

      1. Car insurance

      2. Water bill

      3. Etc.

   3. Utilize a mortgage calculator to determine Principal & Interest payments

      1. Estimate your monthly payments 

         1. Don’t forget to factor in Taxes & Homeowner’s insurance

6 Months Out from projected closing date:

1. Make sure you’re on track with your savings plan

2. Go through your budget and make sure you are following your plan

   1. Have you saved half of your goal yet? 

   2. If no, what needs to be adjusted to stay on track 

   3. Are you on the path to homeownership? 

   4. Do the numbers say so?

   5. Make adjustments (if need be) to get back on track

2 Months Out from projected closing date:

1. Interview a real estate agent

   1. Make sure you like the agent

   2. Do they have experience helping buyers?

      1. A buyer’s agent and a listing agent are 2 different breeds

      2. Can they answer your questions?

      3. Do they know the market you’re looking in?

      4. Can they connect you with quality, licensed vendors

         1. Lender

         2. Inspectors

         3. Title company

         4. Etc.

2. Get pre-approved for a mortgage loan

   1. This is why you’ve been preparing all this time

   2. The loan officer will look at your:

      1. Credit report & score

      2. Monthly income

      3. Bank account statements

      4. W2 Forms

      5. Income tax returns

      6. Investment accounts

   3. It will cost you $0 to get pre-approved

   4. You’ve been preparing for this!

3. Start house hunting

   1. Agent should set you up on automated property emails based on your criteria

   2. Search https://www.mccordrealtor.com/find-properties, the local OPEN HOUSE APP or your home-search sight of choice

   3. Alert your agent to any homes you’re interested in that you see yard signs, open houses, a friend/neighbor tells you about or flyers you receive in the mail

   4. Setup tours to see them in person and find your next home