How To Prepare to Buy a Home

Buying a home should not start on the day that you begin looking at houses. Surprisingly, some home buyers go that route and do not prepare to make the purchase. If individuals don't get ready for a home purchase, they will find home buying much more stressful than the prepared buyer.

Buying A Home = Hopes and Dreams

Everyone recognizes home buying as a major commitment. Yet purchasing is a home is also tied in with emotions and hopes and dreams. Some potential home buyers let their emotions get the better of them. They do not focus on the financial and other practical details involved in buying a home.

The unprepared buyer can end up finding the perfect home and then realizing that nothing is in place for the purchase. When the prepared buyer finds the perfect home, everything that needs to be in order is organized at that point. The prepared buyer can enjoy the experience of finding their dream home and will proceed with relative ease through the home buying process.

Preparing to Buy a Home

1. Down Payment

Most home buyers cannot put together a down payment at a moment's notice. A down payment is a substantial expense. The amount varies according to the loan, lender, and loan program. It can be as low as 3.5% of the home's purchase price for FHA (Federal Housing Administration) loans. Down payments, however, can also be as high as 20% of the purchase price. Wherever the amount falls, the down payment reflects a percentage of the sale price of a house so home buyers have to be prepared to pay a hefty sum.

2. Closing Costs

Often first-time home buyers are surprised by the closing costs. Of course, sometimes the seller will offer to help with this expense but this scenario happens mostly in a buyer's market. Home buyers are advised to include closing costs in their budget. They can expect to pay in the range of $2700 in the US market.

3. Credit Rating

Home buyers should enter into the process with the best possible credit rating. If an individual is thinking about buying a home in the near future, they should check their credit rating – preferably, a few months in advance. Being prepared with that information means that a potential buyer has the chance to improve their credit rating.

4. Pre-approval

Pre-approvals for loans give a positive edge to home buyers. Having a pre-approved loan makes it easier to negotiate and arrive at a deal. Home sellers respond well to potential buyers with pre-approvals in hand.

5. Moving-in Expenses

Obviously, home buyers have to factor moving-in expenses into their budget. These costs can include the actual 'moving' as well as new furniture expenses or necessary renovations. Some shopping for furnishings and changes to a house can be deferred until after a home buyer settles into their new home. Yet some things have to be taken care of before a buyer moves into a new property. If basic furniture is needed or renovations are necessary to accommodate young children, these concerns have to be looked after before the move.

What Do You Think Is The Most Important Step In Preparing To Buy A Home?