First Steps

9 Things You Need Before Buying a House

Buying a house takes time and patience, and for many first-time buyers, it’s an emotional process. As you prepare for what is likely one of the most significant investments of your life, make it easier on yourself by getting prepared. Use the tips below to help make the experience more enjoyable.

Pay down debt

Since lenders often consider your debt-to-income ratio when you apply for a mortgage, credit card debt, personal loans, and auto loans may limit your ability to qualify for certain mortgage loans. By reducing debt and keeping monthly payments low, you may have a better debt-to-income ratio, which frees up money for your home purchase.

Saving for a down payment

With FHA loans and other programs, you may be able to purchase a home with little money down. But with a larger down payment, you may enjoy smaller monthly payments, and you may be able to avoid paying for mortgage insurance.

Check your credit

Get a copy of your credit report (it’s free for U.S. consumers) and verify that everything is accurate. Errors can drag your score down, and may make it harder to qualify for certain mortgage loans. But you may be able to fix those errors, and it’s best to give yourself several months to do so.

Calculate how much you can borrow

By knowing an approximate price range for houses, you can limit your search to homes that are in that range. Affordability typically depends on your down payment and monthly income, and a Finance of America mortgage advisor can perform exact calculations for you.

Gather documentation

First-time buyers may be surprised at how much work it takes to get a mortgage. Start gathering bank statements, W-2 forms, and tax returns to document your finances. If you’re self-employed, you may need to provide additional details about your business.

Decide what you need (and what you want)

How many bedrooms and bathrooms do you need? If you plan to grow your family or downsize, consider those factors. Do you prefer a single-level home, an open floor plan, or a large yard? With your dream house in mind, you and your real estate agent can focus your efforts.

Get to know neighborhoods

Before you look at individual houses, evaluate potential geographic areas. Research school choices and neighborhood data, and spend some time walking around to soak up the vibe.

Budget for homeowner expenses

You may spend more than just your mortgage payment as a homeowner. Prepare for ongoing maintenance costs, new furniture, renovations, and the occasional surprise.

Get pre-approved

Have a mortgage lender provide a pre-approval letter before you start shopping. Doing so allows first-time buyers to identify potential problems with financing, and it shows sellers that you’re a serious buyer.

Speak with a Finance of America mortgage advisor today to get preapproved and to find the best loan for your needs.

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