Check Your Credit Report

Your credit history will determine whether you qualify for a mortgage loan. The amount of a loan you qualify for and potentially the interest rate you will pay hinges on good payment history on your credit report.

Down Payment Requirements

Your down payment required will depend on the type of mortgage you choose. Some conventional loans aimed at first-time home buyers allow as little as 5% down. Determine how much you need to save to achieve your down payment and then set up automatic transfers into a savings account to get that money saved.

Remember the Closing Costs

In addition to your down payment, you will need to pay additional closing costs associated with the purchase of a home. Examples of closing costs include charges for appraisals, home inspection, credit report, flood determination, title insurance, closing fees, and homeowner’s insurance. Closing costs can vary between lenders, so shop carefully.

Know How Much You Can Afford

Your monthly housing costs (including principal, interest, real estate taxes, and homeowner’s insurance) should not exceed 26% of your gross monthly income. The total of all of your monthly loan payments (installment, revolving, and mortgage) should not exceed 43% of you gross monthly income.

Get Preapproved

Meeting with a mortgage lender gives you the opportunity to review your credit report, credit score, and lets you know exactly what you can afford to borrow. In a competitive marketplace, being preapproved can give you an edge over home shoppers who have not taken this step yet. Being preapproved will also ensure that there are no last-minute financing surprises or delays.

Choose a Real Estate Agent

When hiring a real estate agent, it is best to go with an agent who will solely works for your benefit. Take time to talk with multiple agents to find the one that best fits your buying needs.

The Importance of a Home Inspection

A home inspection is a assessment of the structure and mechanical systems of a home. Professional inspectors look for potential problems, so you can make an informed decision about buying the property. Standard inspections do not test for things like radon, mold, or pests. Understand what is included in the inspection and what other inspections you might need.

Homeowner's Insurance

Your lender will require you to have homeowner’s insurance to protect your home before you can close on your loan. Home insurance covers the cost to repair or replace your home and belongings if they are damaged by an incident covered by the policy. It also provides liability insurance if you are held responsible for an injury or accident on your property. Buy enough home insurance to cover the cost of rebuilding the home if it is destroyed.

Resources

Click on the buttons below to find more helpful home buying information

CFPB Toolkit

Homebuyer's Handbook