NEVER spend more than you can recoup.This seems obvious, but you'll be amazed how many people decide to throw vast amounts of money into a house that they will never again enter for the rest of
Do These 4 Things Now So You Can Buy A Home This Spring
Rev Up Your Saving EngineIf there’s one thing you need to buy a home, it’s money. That’s why Dave recommends kicking debt to the curb first. Once you’re debt-free, you can focus your dollars on more important endeavors.Pile up as much cash as you can to cover these standard home-buying bases:
- Emergency fund with three to six months of expenses
- 10–20% down payment on your new home
- Closing costs, which can total up to 5% of your home’s value
Secure FinancingPaying cash for your home? Give yourself a pat on the back and skip this step. If not, Dave won’t get mad at you for getting a 15-year fixed rate mortgage.“It’s never too early to talk to a lender,” Karl says. “Get your credit score pulled, have a mortgage professional review the information, and make sure there are no surprises.” Start the ball rolling with these three steps:
- Review your credit report: Do this on your own first so you can fix errors before your lender spots them. You can order a free copy from each of the three credit agencies—TransUnion, Experian, and Equifax—once a year.
- Gather documents: Applying for a mortgage requires a stack of paperwork. Here are a few documents you’ll need.
- A copy of your most recent bank statements (checking, savings, and other accounts)
- Proof and balance of any retirement accounts (401k, IRA, etc.), mutual funds and stocks
- Most recent W-2
- Most recent paystub from your employer
- Driver's license
- Get preapproved: Want to show sellers you’re a serious candidate? Don’t settle for prequalification. Preapproval means you meet all the lender’s requirements and gives you the green light for a concrete loan amount.
Fine-Tune Your Wish ListYour home is a big investment. The more homework you can do upfront, the easier it will be for your real estate agent to provide better options. The following steps can help you narrow down your choices:
- Set your budget: Don’t base your home-buying budget on what the bank says you can afford. Follow Dave’s advice and keep your mortgage payment to 25% of your monthly take-home pay. Be sure to build room for maintenance and repair costs into your home ownership budget.
- Make a list of featuresThoughtful consideration at this stage pays off. “The one thing we know for sure is that life is uncertain,” Dawn says. “You always have to start with the end in mind.” A good real estate agent will advise you on what features could help—or hurt—resale value down the road. You don’t want to be stuck with a home you can’t sell if you have to relocate in a couple of years.
- Choose your location: Once you’ve zeroed in on the neighborhoods and school districts you like, i can help you to set up a client portal search through the local Multiple Listing Service (MLS). This enables you to receive real-time email notifications when new homes hit the market in your price range so you’ll know what to expect when you’re ready to buy.
- Visit open houses: Want to see how your budget lines up with your wish list? Karl says open houses are a great way to determine what your dollars will buy. Dawn agrees: “What if you realize your dollars are not going to buy what you thought it would? Or what if you could spend a little less that you thought?”