For all of you people out there who are planning on buying a home for the first time in the next year or so, it’s time to get all your ducks in a row. The timeline below outlines a general plan to get you on the right track.
12 Months Prior: Check your credit score. If you see any errors on your credit report, it's very important to get them corrected. It may take a little time and effort but this will have a positive impact on your score almost immediately once the errors are removed. One of the easiest and most effective ways to improve your score is to pay your bills on time. Also, try to pay down as much debt as you can over the next few months. Your debt to income ratio is an important factor when you are applying for a loan or mortgage. Now is also the time to start saving money for a down payment, home inspection, closing costs, moving expenses, etc. Save, save, save!
9 Months Prior: Research and prioritize what you are looking for in your home. What are the most important features? How big of a home to you need? Do you want a big yard? Are the schools good in the area? Is the neighborhood the right one for you? How long of a commute do you want? All of these questions will help narrow down your search. You can even attend some open houses of homes in your price range and in neighborhoods where you have interest.
6 Months Prior: Research lenders and Realtors. You want to make sure you hire the right people to help you make the process go as smoothly as possible. As you interview potential Realtors, they may be able to point you towards lenders who work well with first time home buyers. Do your homework when choosing a lender – it could save you thousands of dollars in the long run.
3 Months Prior: Get pre-approved. By this time, you probably have chosen a lender. Now’s the time to make an appointment with them to begin the process of getting pre-approved for a loan. They will ask you for documents such as W2’s, tax returns, bank statements, credit card/loan statements, etc. and will run a credit check on you. This will determine how much of a loan you are qualified for. This pre approval from your lender gives your real estate agent a dollar figure to work with and determine which houses you can afford. You don’t want to waste your time or your Realtor’s time looking at houses that are beyond your budget.
2 Months Prior: Make an offer! Hopefully by this time you have found the house of your dreams and are ready to make an offer. Typically, if your offer is accepted and the appraisal and inspection are satisfactory, it takes about 4-6 weeks to officially close on the sale of the house. Prior to closing you will want to review your mortgage paperwork with your Realtor or lender and obtain home owner’s insurance for your new home. Usually a day or two before you close, you will do a walk-through of the home to make sure it’s in satisfactory condition. You will also be given an exact dollar amount to bring to the closing table which you will need to bring in the form of a cashier’s check or arrange to have it wired directly.
Buying a home is an exciting but daunting experience. Being prepared and informed will help you immensely in finding your perfect home.