If you're in the market for your first home, you're getting ready to make a very big investment. In fact, it just might be the biggest investment you'll ever make. Because of that, it's important that you take the time to prepare for the process. Purchasing your first home is more than just finding the perfect one. It's also about the mortgage, which is why it's so important that you prepare. Here are four steps you should take before you start looking for your first home.
Do Your Homework
As soon as you make the decision to start shopping for your first home, you need to start doing your homework. The first thing you'll need to do is obtain a copy of your credit report. Once you have it in your hand, sit down and go over every detail. Pay close attention to the debts that are showing on your credit report.
If you notice discrepancies, including debts that aren't yours, or that have been paid off already, contact the credit reporting agencies and file disputes. If the information is incorrect, the agencies will be required to remove or amend the information, which may raise your credit score—which you should know before you start shopping for your first home.
Plan for Your Down Payment
Unless you have perfect credit, you're going to need a down payment. While there are programs available to help first-time home buyers, it's still a good idea to have money in the bank for closing costs and other costs associated with purchasing a home. To make sure you have enough set aside for those costs, be sure to contact a mortgage lender like GRT VA LOAN in your area. They'll be able to help you identify the down payment you should expect to pay.
Create a Realistic Budget
Before you head out to look for your first home, you should create a realistic budget. Knowing what your budget will be will help you lock in exactly how much home you'll be able to afford. Your budget should include the payments you're currently making, plus the additional expenses you'll have that are related to your new home, including insurance, warranty programs, taxes, and HOA fees. Knowing what your budget is will help you understand how much of a house payment you can realistically afford.
Once you know your credit score and you've created your budget, it will be time to obtain your pre-approval. Receiving your pre-approval letter from a lender will help you and your realtor narrow your search to homes that are within your mortgage limits.