7 Things House Hunters Should Do Before Touring Homes
Homeownership is a major life decision both financially and emotionally. That’s why it is important to put in the preparation work long in advance of touring homes to set yourself up for the best success in your home-buying journey. Here are some steps to take before you begin touring home:
1. Get your finances in order
Do a credit check
You should have a good idea of what your credit score is. A good credit score means that you will typically qualify for better interest rates, increasing your purchasing power, and decreasing the amount you pay on a loan over time.
Lenders will often require a minimum credit score, so if yours is on the lower end, the first step will likely be to speak with a lender about what they require and the steps you can take to increase your score to a point where loan approval will become possible.
Determine your debt-to-income ratio
Debt-to-income ratio (DTI) is a number that lenders will use in order to decide if you qualify for a home loan. It is an important part of your overall financial health, and it compares how much you owe each month to how much you earn. It is calculated by doing the following:
Step 1: Add up your monthly bills such as rent/house payment, child support or alimony, any loans, credit card payments, and other debts. For the purpose of mortgage approval, monthly expenses such as gas, groceries, and utilities are generally not included in this number, but you should still have an idea of what those are in setting your general budget.
Step 2: Divide the total monthly payments by your gross (before taxes) monthly income.
The result in the form of a percentage is your debt-to-income ratio. The lower this number, the less risky lenders will see you. Your lender can tell you what they require specifically when it comes to your DTI.
Save for your down payment
Most loans will require some kind of down payment. This is an amount of money that you must put towards your loan when you close on your new home. It is typically anywhere from 5%-20% of the purchase amount. The best way to prepare is to begin saving well in advance. Your lender can give you an idea of how much of a down payment you will need.
Determine your household budget
Sit down and write out your monthly income and expenses and don’t leave anything out! Just because you might be able to get approved for a particular amount does not mean you are necessarily going to be comfortable spending that. You should put on paper every detail of your finances and decide how much money you will be comfortable spending each month on your new home. If you do not currently own or rent, make sure you factor in new household expenses such as utilities, household supplies, etc. Use our Mortgage Calculator to estimate what your mortage payment will be based off of various price points, interest rates, with various amounts of money down.
2. Get pre-approved
It is important, and in many cases crucial, that you start the home buying process by getting pre-approved for a mortgage loan if you plan on borrowing money to buy your home, which most people do. This will let you know how much you qualify for and can help guide your home search by setting a realistic budget.
3. Explore all of your loan options with a lender
There are many loan options available, so it is a great idea to talk to a lender about what might work best for you. We highly recommend interviewing multiple lenders and working with a lender with a good track record and knowledge of the local market in which you are searching for homes.
4. Set your priorities for the features and condition of the home
Forecast - think beyond this year. Ask yourself how long you envision yourself in this next home and what features this home will need as your family situation changes during that time period.
You can also start by making a list of your “wants” and “needs”. It is not often that home buyers find a home on the resale market that has every single feature they want and need. Identifying which features are crucial to you and which you might be willing to compromise on is important to do before you begin touring homes for sale.
5. Identify your ideal area
Think about what you want from your new home. Identify things like what school districts you prefer, where you work, and what recreational and shopping opportunities you would like to have nearby. We put together this list of 6 questions to help identify your ideal place to live.
6. Get familiar with the real estate market
Knowing what is going on in your local real estate market will help give you an idea of what to expect. Our free Monthly Market Updates are a great resource if you are looking for a home in the Greater St. Louis area.
7. Interview real estate professionals
Working with an experienced Buyer Specialist puts a powerful advocate in your corner during the home buying process. There are many to choose from. You should research and interview real estate professionals before choosing the one that is best for you.
Whether you are an experienced or first-time homebuyer, doing these things before you get serious about touring homes will set you up for success.
Our local real estate experts have helped hundreds of people purchase homes in the Greater St. Louis area. Our division of responsibility and team concept allows every member to perfect their skills in their area of expertise, providing our clients with what we like to call "Simply Exceptional Service."
Would you like to know more about the home buying process? Would you like to hear more about what our team can do for you when it comes to buying your next home? Contact us or complete the form below with any questions or needs you may have and we will be in touch!