Before you start seriously shopping for a home, there’s some groundwork you should do to put yourself in the best position to buy a home.
Check and repair your credit
The Fair Credit Reporting Act
requires the three nationwide consumer credit report companies, Equifax, Experian, and TransUnion, to provide you with a free copy of your credit report and FICO scores upon request once a year. You can order the reports by visiting AnnualCreditReport.com or calling 1-877-322-8228.
Each credit report company has its own criteria for scoring your credit report. A lender will usually use the middle FICO score. All three scores need to be as high as possible for you to receive the best interest rates.
If you can, order the reports at least three months before applying for your home loan. If you find a mistake you need to correct, or you want to improve your score by paying down an account, you’ll need at least two months before the credit score improves.
You can dispute an inaccurate item on the report by contacting the consumer reporting company and the information provider in writing. Be sure to include copies of your proof.
Don’t accidentally raise your scores
Lenders not only look at how much credit you’re using, they consider how much credit you have available. However, now is not the time to be opening any new accounts or close existing accounts.
Don’t purchase furniture or a new car or any other big-ticket item before buying a home. Lenders are very careful about the amount of debt you have and how much you pay down every month on the debt payments you have.
Narrow the choices
Think about how you want to live. One story or two? Low-maintenance condo or big yard for the kids? New or older home?
Drive through the neighborhoods you’re interested in and look at homes. Visit a few open houses in the neighborhoods you will consider. They will usually be listed in your local newspaper with the hours hosted. Be sure to tell the real estate professional hosting the open house that you are already working with a buyer’s agent.
With Google maps, video, virtual tours, multiple photos, school reports, neighborhood reports and more available online or on phone apps, you can get a good idea of what neighborhoods, home styles, and home prices are like where you want to live.
Find an Experienced Real Estate Broker or Agent
Buying a first home is a complex process. Jim Bottrell is an experienced real estate broker that will assist you through the process: the home search, comparable homes sold, making an offer, inspection, repairs, and the appraisal, as well as help you find the best value, neighborhood, and quality home for your budget and requirements.
Think long-term investment
According to the National Association of REALTORS®
, home equity growth beats inflation by about one to two percent annually, not to mention government subsidies for home ownership in the form of tax relief and other incentives.
However, if you look at owning a home strictly as an investment, you’ll miss many pleasures. Look at your home as a home, rather than part of your portfolio. Buying a home allows you to live in the neighborhood you want for as long as you want, without having to worry that the landlord is going to sell out from under you. Your stake in a home makes you part of the community, committed to making it a better place to live.