A home can be a place of safety and refuge in an uncertain world. But it's also the largest single investment in the average American's life and therefore requires a lot of thought and preparation before the purchase. First-time homebuyers make a few common mistakes when purchasing their first home but you can avoid them if do a little preparation before starting your search. Here are the top three steps you should take before you start looking for a home.
1. Find Out Your Credit Score
More than one potential homebuyer has gone house hunting, fallen in love with a property, and then had their hopes dashed when their loan officer ran their credit score. Your credit score is one of the most significant factors involved in applying for a home loan. So much so that it can be the difference between denial and approval for a home loan. You need to know your score before you ever look at a house. You can request a credit score from the three credit bureaus and then learn what you need to do to raise or maintain your score.
2. Get Pre-Approval
Another step you should take before house hunting is seeking pre-approval for a home loan. Like checking your credit score, this will ensure that you don't get too disappointed. Visit a loan officer so they can determine whether your credit score, income, and other determining factors make you eligible for a home loan in your budget. With pre-approval in hand, you can comfortably begin your search knowing the only disappointment will be a dream home that's out of your budget.
3. Determine an Exact Budget
One of the most dangerous financial mistakes you can make is to buy a home that's outside of your budget. When you experience a major strain on your finances it can have a ripple effect on your work life and your relationships. Don't look at any houses outside of your budget unless your real estate agent is confident that a lower offer will be accepted. But first, you need to know what that number is.
If necessary, sit down with a financial planner and figure out exactly how much house you can afford. Also, be careful who you ask for advice. Unless you know and trust your loan officer, they may not be the best person to help you determine a budget. Once you've determined a budget, you can begin the exciting search for your new home.
For more information, work with real estate services that list single-family homes.