As a single parent, one of my biggest desires was to own a home. I dreamed of my small son swinging in the backyard with our new dog jumping beside him. I imagined what colors I would paint my walls and how I would decorate. I thought of having family and friends over for barbeques and birthday parties with my home full of rambunctious boys. I longed for a home of our own, yet I was also filled with doubt. Could I really afford a home? How would I even get started? How much would I have to save for a down payment? The doubt would usually win and I’d bury the dream again for a while. It wasn’t until my sister, who is a realtor, visited me and we talked about how affordable home ownership could really be that I realized it could be more than a dream. She compared what I was paying for rent to what a house payment would be and I realized I might really be able to own a home. The next weekend, I decided to attend an open house. As I wandered the home, I met the realtor. She introduced herself, we talked and then she asked me if I was pre-approved. What? That seemed a little pre-mature; I thought. I was just looking after all. The next weekend, I went to another open house and was asked the same question. I realized I probably needed to do some research about home buying. I talked to a couple banks and asked about loans. I read articles online and I enrolled in a first-time home buyer’s class. While buying a home isn’t overly complicated, I certainly learned things that made the process much easier. I wanted to share what I learned with you to help you in your home buying journey.
- Check your credit. The types of mortgages you may qualify for and interest rates you receive will vary based upon your credit score. You are entitled to one free credit report each year from each of the nationwide credit reporting companies, Equifax, Experian and Transunion. To claim your free reports, visit annualcreditreport.com or call 1-877-322-8228. Get your report, review it, check your score and address any issues you see on your report.
- Prepare a detailed budget. Before you begin shopping for the home of your dreams, you’ll need to know what you can comfortably afford. I mention comfortably because I ended up being approved for more than I wanted to spend. There are many tools available online, but the best ones take into account planned expenses such as school lunches, gasoline, credit card payments, utilities and child care. You’ll also need to consider unplanned expenses such as vehicle repairs and home maintenance. This handy calculator is a great tool to prepare your budget.
- Get your documents together. It took me some time to gather all the necessary documents I needed to apply for a mortgage. The basic items you will need will be one to two years of tax returns, pay stubs or other proof of income, bank statements, a photo ID and other assets such as life insurance and retirement funds. Different lenders may have additional requirements, but all of them will require these items.
- Get pre-approved. It’s fun to look online at real estate listings or spend your Sunday afternoon at an open house, but serious home-buyers need to start the process at the lender’s office. Your lender can discuss loan options with you. You’ll also learn the maximum amount you can borrow. It’s also beneficial because most home sellers prefer a pre-approval letter and will be more willing to negotiate if they know you are a serious buyer.
- Know your must-haves. You are almost ready to begin shopping for your dream home. Before you begin, it’s a good idea to prepare a checklist of must-haves and nice-to-haves before you begin. For example, maybe you must have three bedrooms, three bathrooms and a garage. A nice to have might be a double car garage or fenced in backyard. This worksheet is a great tool. It will help you consider your needs and will also help your realtor show you homes that are right for you.
Six months after I decided to buy a home, my son and I moved into our three bedroom, two bath ranch home with a fenced in backyard. My first purchase was a swing set, followed by a BBQ grill. We rescued a cat two months later. The moment I signed the papers is still one of the best of my life. From cutting my grass, to painting, to planting flowers, I have loved it all, because I’m building something for us. Your home is out there. I hope this list helps you get one step closer to your dream.