Things you need to do before you buy your home

Here are seven things you need to do before you buy your home.

1. Pull your credit report and check your score: 

   Your credit report and corresponding score are your golden tickets to buying a home. They showcase your credit responsibility and worthiness. Your credit score can seriously impact your mortgage rate. The higher your credit score, the lower your interest rate will be. This means you’ll end up owing a lot less money over the life of the loan.

   Your credit score is broken down by:

   • Payment history: 35 percent
   • Credit utilization: 30 percent
   • Length of history: 15 percent
   • Types of credit: 10 percent
   • New credit: 10 percent
2. Review your budget:

   Use the 28-36 rule to see where your money is going. This is when your maximum household expenses shouldn’t exceed 28 percent of your gross monthly income. Your debt, like credit cards and loans, shouldn’t exceed 36 percent.

   Your debt-to-income ratio, or DTI, is important to lenders for determining how much home you can afford and if you’re a good candidate to receive a mortgage.

3. Get preapproved:

   With a stellar credit score and a solid down payment built up, you might feel confident in buying the house of your dreams. But until you get preapproved, that house will stay in your dreams.

   Getting prequalified is nice, but it’s not the same thing. A prequalification is only based off information you give a lender. A preapproval is completing a mortgage application that pulls all your financial records.

   Lenders base how much money they’re willing to give you based on your entire financial existence: your income, debt, and credit history all pay a crucial role. But it’s also there to show you how much home you can afford. If you know you can only get a $200,000 loan, you won’t waste your time looking at half a million-dollar homes.

4. Beef up your down payment:

   Down payments for homes and cars are very similar: the higher the down payment, the less each monthly payment will be. But homes are much more expensive, which means the more you can put towards your down payment, the better off you’ll be every month.

   It can be difficult to keep stashing money away for a down payment when you’re trying to afford basic necessities right now. Try cutting back on things you can manage, like dining out, grocery spending, unnecessary purchases, and travel.

   Your debt might be holding you back as well. Try making larger debt payments every month until it’s completely paid off. Then the money you were putting towards your debt can now go to your down payment fund.

5. Get an agent:

   Whether you’re looking for a home 300 miles away or three, it’s a good idea to find someone who knows the neighborhoods better than you.

   A real estate agent is on the hunt for your best interest because they want you to find the right home and buy it. Agents get their commission after a home is sold, so you don’t have to worry about costs up front

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   7 must-do’s before buying a home

   DORI ZINN