Five Things to Do Before Buying a First Home
Note: Every home buying scenario is different, so some of the items on this list might not apply to you.
- Create a monthly housing budget for yourself.
This is one of the most important things to do before buying your first home. That’s why it’s first on our list. Creating a basic housing budget will help you avoid financial hardship later on. And fortunately, it’s fairly easy to do.
- Start saving money — the more the better.
If you’re going to use a mortgage loan when buying your first home, you’ll need to have enough money in the bank to cover your down payment and closing costs. The down payment amount will depend on the type of loan you use, and the price of the home.
- Check your credit report for accuracy.
Your credit reports (you have three of them) show how you’ve borrowed and repaid money in the past. This information is used to produce a three-digit credit score (you have three of those, too). Mortgage lenders use these scores to determine whether or not you’re qualified for a loan, and what kid of interest rate they’ll assign.
- Check your credit score to see where you stand.
We just talked about credit reports, and how they determine your credit scores. Checking your scores is another smart thing to do before buying a house.
- Research your local housing market.
What is your local real estate market like right now? Is it a buyers’ market, a sellers’ market, or somewhere in between? What’s the inventory situation? How competitive is it? Are homes selling fast, or do they stay on the market for a long time?