Buying your first home is one of the most important milestones in your life. There are plenty of steps that need to be taken before you buy a home, and if you miss one or two, you could be setting yourself up for major issues down the road. Make sure you hit everything on the following checklist to ensure yourself a smooth buying process and a successful first purchase.
Check your Credit Score
You’ll want to make sure you know your credit score before you go any farther in the home buying process. If you find you have a low credit score or there are issues with your credit score, you can correct them and get things in order early on. A low credit score will lead to higher interest rates and possibly the inability to get a loan. You won’t want to find your dream home and realize you can’t get approved for a loan, so make sure you have a strong credit score before going any farther.
Secure Necessary Documents
Applying for a loan will require you to provide the lender a book’s worth of documents. You don’t want to be scrambling at the last second to get any documents together, and if you can’t provide something you may not be able to get the loan. Most lenders will require you to provide the following documentation:
- W-2 Forms from the past two years
- Tax Returns from the past two years
- Credit Card Statements
- Loan Statements
- Bank Statements
- Your addresses from that past five years
- Retirement Statements
- Two most recent pay stubs
Being able to provide these documents will increase your chances of getting a loan, so start collecting them as they come in.
Start Multiple Budgets
Owning a house is expensive, and you’ll want to make sure you have enough money saved away to not just buy your house, but also maintain it. You should have already been saving for a down payment if you were planning on buying a house, so don’t plan on having that money after settlement. You’ll want a budget for monthly repairs and miscellaneous purchase. When you move into your house is when you’ll start realizing how much you actually need to have a functioning house. The other budget you’ll want to start before you actually buy your house is for repairs. You are now responsible for any repairs that will need to be made to your house, and if you can’t pay for them, you will have to resort to loans, which you will not want. Put away some money each paycheck leading up to your purchase so you can hit the ground running and make repairs as they come up.
There is no foolproof guide to buying your first house, and you will get advice from everyone who has been there before you. Take that advice and learn from other people’s mistakes so you don’t have the same issues they had. Take your time and do not rush into buying your home as it is a decision you’ll be living in for foreseeable future.