What Do You Need To Buy A House: Positioning Yourself to Buy Within A Year
What do you need to buy a house? People often don’t have an answer to this question. Buying a home is often the most critical monetary transaction a person makes in their lifetime. Being educated on the things you need to make a home purchase will put you ahead of the game. Also, being familiar with the home buying process allows you to know whether or not you can make a purchase when a home comes up that you want. Without the knowledge you need, you may find yourself rushing around, trying to figure out how to make it happen, and you’ll likely miss the chance to buy the home you want.
What Do You Need To Buy A House: Top Ten Requirements
Confirming substantial, verifiable income with a lender is one of the first steps you’ll need to take to prepare for the home buying process. A pre-approval letter will not only let you know the amount of the loan that you qualify for, but it can also give you insight into your finances. Bringing awareness to areas you might want to work on over the next year and letting you know what price bracket to look in.
You will need to include at least two years of tax returns, along with your W2s and paperwork to support your income history. If you show drastic changes in your income year after year, a lender may request further explanation or documentation. Lenders will ask for bank statements to get a snapshot of all funds going in and out of your bank account, and they’ll usually require 30 to 60 days of transactions, along with proof of employment and paycheck stubs.
Spend the year trying to raise your credit score by making on-time payments, lowering balances. Paying cell phone and utility bill payments on-time can also contribute to increasing your credit score. Ensure that you only open new accounts if necessary; too many inquiries on your credit can negatively affect you. And don’t close unused cards with zero balances; this also has negative consequences.
Pay Off Debt:
The lender you choose to receive your pre-approval letter from will often suggest ways to increase your approval amount. The information can include debt that would be helpful to pay off and how much. If you can pay off debt without putting yourself in more debt, it will benefit your buying power.
Save For A Down Payment And Closing Costs:
This can be a place of contention for some people. Saving enough cash for a down payment and closing costs to buy a home is usually the single biggest roadblock for prospective buyers. For many, their down payment will come from the sale of their current home. If not, you must save the cash up on your own. The more you have to put down, the lower your monthly mortgage payment can be. On average, you want to put down at least 20% of the price of the home you want to buy. However, plenty of buyers take advantage of Conventional or FHA loans that only require between 3.5% and 10% down. And if you’re a US veteran, you can purchase with 0% down.
Make No Large Purchases For 12 Months:
You may find yourself anxious to buy things leading up to your home purchase, such as new furniture, appliances, and other items. You need to know that a major purchase, before or after, your initial approval has the potential to affect your qualification position. The loan application process does not end once you receive your pre-approval letter. You must maintain your exact status or improve it up until you close on the home. Also, try not to make any job changes within the year.
No Late Payments:
Late payments always have the potential to have negative consequences for your credit, but during the year leading up to buying a home, they are particularly detrimental. Mortgage payments, car payments, rent, etc. need to be made on time, and consistently.
Research Neighborhoods And Schools:
- Take the time to choose the neighborhood or community that’s right for you.
- Drive through the area at different times of the day and on weekends. If you only look at the home three times before purchasing it at 1:00 in the afternoon on Mondays, you may find the area very different in the evenings when people return home for the day.
- Look at neighborhood amenities and businesses.
- If you have school-age children, research the schools in the area and double-check the most current zoning maps to ensure zoning to the right school.
Make The Commute:
Take the time to make the commute from the new neighborhood to your workplace. Try to do this during the hours that you would regularly drive to and from work. Buyers can find themselves unhappy with their commute if they didn’t take the time to study traffic patterns, local construction, and even school zones. Also, consider travel time to favorite stores, friends, and family or other places that you frequent that are important to you.
Research And Interview Realtors:
Most importantly, do your due diligence to find a Realtor that not only aligns with what you want and need but a Realtor that is well-versed in the home buying process and negotiation. Realtors should have your best interests at heart and be able to guide you through one of the most emotional and important purchases of your life.
What Do You Need To Buy A House: Living Houston’s Agents Are Experts
Living Houston’s agents are well-trained in everything you need to help you complete the home buying process successfully. We pride ourselves on our professionalism and top-level, white-glove service. If you’d like to schedule an interview, you can do so here.