One year out
- Get those credit reports: See where you currently sit and address any potential errors.
- Deal with your debt: Now we’re not saying to conquer your student loan before shopping around, just make sure to pay down high-interest credit-card balances and payday loans.
- Pay bills automatically: Just one late payment can knock 100 points off your credit score—and it can take many months to recover. To make sure bills are always paid on time, consider using automatic withdrawals or an online-bill payment system.
- Save your dough: If you’re starting to think about buying a house, then you should also begin to think about saving your money to see how much of a mortgage you can afford.
6 months out
- Nail down your priorities and budget: Examine your family’s priorities for a new neighborhood and home while assessing your purchasing power.
- Start making your list: Make a list of potential homes that speak to you. You can trim and add to the list as budgets and priorities are refined.
- Sort through mortgage options: There are plenty of lending options and now may be a good time to talk with a lender and see what mortgage suits your situation best.
- Save more: Think about expenses you could trim—for example, eating out less or maybe dropping that cable-TV package.
3 months out
- Loan explorer: Need to know what your specific lending scenario will look like? Try a loan explorer to build a rate quote in real time based on your specific information.
- Don’t open or close any accounts: Until you’re unpacking in your new home, try to avoid any “red flags” –such as opening credit accounts or closing old ones.
- Reduce credit use: Try to keep that balance below 30 percent of your available limit. If that’s not possible, consider making an additional payment before the statement’s closing date to reduce the balance reported to the credit bureaus.
- Look for a Realtor: Now that you have your budget and priorities settled, consider hiring a Realtor to help deal with the maze of forms, financing, inspections, marketing, pricing, and negotiating.
- Refine list of potential homes: Go through your list every few days and keep fine-tuning your list of potential homes. A Realtor can certainly aid in the house hunt.
2 months out until signing day
- Understand the effect of mortgage shopping: A ‘hard inquiry’ occurs when a lender checks your credit score. Hard inquiries have a slightly negative affect on your credit score, however, all mortgage-related inquires made within 45 days only counts as a single inquiry. It’s best, for your credit score, to consolidate your mortgage shopping to a fairly concentrated period of time.
- Arrange for an appraisal: An appraisal is required for a home loan to be approved. Additionally, we recommend a home inspection as well, which can warn you of serious problems before a deal closes.
- Get homeowners insurance. This is another requirement in order to get your home loan approved.
- Confirm and prepare for closing costs: Closing costs can be a shock for first-time-home-buyers. They can include your down payment, legal fees, paperwork costs, property taxes, and title insurance.