- Step 1: Get Finances Organized
- Check your credit score and pay down as many balances as you can. Many online services let you check your score for a minimal fee and even have credit score simulators that will help you decide what balances to pay down in order to maximize your score.
- Save up for a down payment. It is best to accumulate the down payment funds early and have it sitting in a checking or savings account. When it comes time to underwrite the loan, avoiding any large transactions can potentially delay the loan.
- Organize paperwork. Documents such as bank statements, prior year tax returns and perhaps a job offer letter from an employer may be needed in order to get your loan funded.
- Step 2: Get a Pre Approval Letter
- Talk to a mortgage lender and have them check your credit and give you a pre approval letter.
- Having that letter will help you figure out your budget, and also, many real estate agents do not take potential buyers seriously until they have been pre approved.
- Step 3: Think About Your New Home
- Determine your budget, not just considering the purchase price, but taxes, insurance and other expenses that will be associated with being a homeowner.
- Determine acceptable locations for your home, taking into consideration things like school districts, commute times and the type of neighborhood you would like to live in.
- Make a list of “must-haves” that you need to have in your home, like the number of bedrooms and bathrooms, also make a list of “nice-to-haves” for less important features that you like but may not be able to find a house with all of them.
- Consult with a trusted real estate agent. A good agent will ask questions to help narrow your search and will help be knowledgeable of the local market.
- Step 4: Begin Your Search and Make an Offer
- Your real estate agent will likely find several potential homes for you to look at. Keep notes on what you like best about each one.
- Once you have found your favorite home, make an offer on the home with the help of your agent. You will want to get the home inspected if the seller has not already done so.
- Your agent will keep you informed of the negotiations with the seller.
- Step 5: Apply for your Loan
- Since you already have been pre-approved, the application should run fairly smoothly. Make sure to get all documents and requirements submitted in a timely manner. The loan must be approved before closing.
- Avoid making any large purchases or applying for new credit until you have closed and moved into your new home. Even if a loan is approved, it can be denied if there is a substantial change in your credit report before the loan is funded and you have closed on your new home.
- Step 6: Close on Your New Home
- Your agent will make sure all the required documents are prepared for your signature on closing day.
- Make sure funds are available for closing costs, title insurance and homeowners insurance.
