4 First Steps You Must Take Before Buying a Home


Many people dream of owning their own home, and even though ownership rates have been dropping in the United States, it is a dream that most people can attain with some work. Of course, the work doesn’t end with earning enough money to afford the house. There are a few things that every potential homeowner needs to do before they can make their purchase, and skipping any of them can lead to some very unpleasant surprises.

1- Check Your Finances

The first thing that every new buyer should do is to make sure that they understand their finances. At the most basic level, this means comparing their current income and expenses minus their current rent to see how much they can afford to spend on a new home. Their savings are also an important part of this analysis, since they will usually be necessary to cover the down payment. The precise portion of a person’s income that they can safely dedicate to a house will vary from case to case, but the general rule of thumb is that a person can afford a house that costs somewhere between three and five times their yearly income. This assumes that they can afford a down payment equal to about 20% of the home’s value, and that they were willing to accept a fairly standard mortgage arrangement.

Since most people are not going to pay cash for the entire value of a home, this is also the stage where they should start looking into a mortgage. The size of the mortgage will depend on their income and their credit score. This means that people who have a bad credit score can sometimes benefit from taking a little while to improve it before they apply for their mortgage.

2- Get Your Documents

Buying a house will involve a huge amount of paperwork and documentation, especially if it involves getting a mortgage. “The process goes much more smoothly for people who get all of their paperwork together in advance, and some of it is impossible to get in a timely manner without a little bit of planning,” said Paradigm Mortgage.

As a bare minimum, people who need to get a mortgage should expect to need at least two of their recent pay stubs, two months of bank statements, and their tax information for the past two years. The lenders will want to see complete forms, so it’s important to bring every page to the meeting. Some will even insist on seeing any blank pages that happened to come with the forms. When in doubt, bring it to the meeting. It’s much better to have something that turns out to be necessary that to be missing a vital document.

3- Know Your Needs

People who have settled all of their financial and administrative business should start thinking about the sort of house that they want to buy. There are far too many houses on the market to simply look at what is available and make a choice, so filtering the list is very important.

Space should be the primary concern. Buyers should learn the size of their current home, and decide if they need more or less space than they already have. If possible, they should try to predict their future needs, which could change if they have children or experience any other major life events. Other amenities, such as solar power, can also be important. Since it might not be possible to find a home with every desired feature, make a list and rank them in order of importance to help make the search easier.

4- Research Locations

It’s also possible to narrow down the list by location. People who have a job already should decide how much of a commute they are willing to tolerate, and look for houses within that distance of their place of employment. If multiple neighborhoods are available, make a ranked list of important amenities, and try to find the one that offers the best combination. Be sure to look up crime rates in the area before making a choice. People who drive regularly should also look up accident rates in the area to see if there are any particularly dangerous roads on which they would need to rely. Once shoppers have narrowed down the list by location and type of home, they can usually start visiting the options to find the one that meets their needs.


About Author

Kelly is DailyU’s lead blogger. She writes on a variety of topics and does not limit her creativity. Her passion in life is to write informative articles to help people in various life stages.

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