7 Things House Hunters Should Do Before Touring Homes

7 Things House Hunters Should Do

Owning a home is a significant life decision that affects you both emotionally and financially. For this reason, it's crucial to begin preparing for the process long before you start touring homes. The following information will discuss the 7 things house hunters should do before they search for homes:

1. Get a Handle on Your Finances

Perform a Credit Check

You should always go into the home-buying process with a good idea of where your credit score is. Having a good credit score will better position you to secure lower interest rates, increase your buying power, and decrease the amount you pay for the house over time.

Most lenders require minimum credit scores, so when yours falls on the lower end, you should first speak with a lender about their requirements. It's also a great idea to ask about potential steps you can take to increase your score to the point where loan approval is possible.

Calculate Your Debt-to-Income Ratio

DTI, or debt-to-income, is the number that lenders use to determine if you qualify for a home loan or not. This number is a good indicator of your overall financial health, as it compares the amount you earn each month with how much debt you owe.

Here's how to calculate your DTI:

Step 1: Total your monthly bills, including house or rent payments, loan payments, alimony or child support, credit card payments, and any other debt you owe monthly. When adding up your expenses for a mortgage, other expenses like groceries, utilities, and gas are not usually factored into the number. However, it's always a good idea to have an idea of how these expenses fit into your budget.

Step 2: Next, you have to divide the total debt owed each month by your monthly gross (before tax) income. The answer you receive is a percentage that serves as your DTI ratio. Generally, the lower this number, the less risky you are for lenders. Ask your lender what they require when it comes to your debt-to-income ratio.

Debt to Income Ratio

Save for the Down Payment

Many loans require at least a small down payment. This is the sum of money that you must pay toward your loan when signing the closing documents. Down payment amounts typically run anywhere from 5 to 20 percent of the home sale amount. The best thing you can do to prepare for a down payment is to save money well in advance. Ask your lender how much you need for a downpayment if you're unsure.

Set a Household Budget

Take the time to sit and plan your monthly expenses and income, and do not leave out any information! You need to know this information because even though you may get approved for a certain amount, it does not mean you're going to be comfortable paying the loan each month. You should write down every detail of your finances and find a range you would be comfortable paying for your new home each month. If you don't currently rent or own a home, it's also essential to factor in expenses like household supplies, subscriptions, utilities, and more. 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's always important, and sometimes even crucial, that you begin your new home search by getting pre-approved for a home loan. This is especially true if you're like most home buyers and plan to borrow money on the home. Knowing if you're pre-approved can save you time and tell you how much house you can afford, which is key to setting a realistic budget.

3. Explore Every Loan Option with the Lender

There are many options when it comes to home loans. So, it's best to speak with the lender about the options that are best for you. We recommend that you interview multiple lenders and work with one who has knowledge of your local housing market and a good track record of closing deals.

List of Questions When Choosing a Lender

4. Set Priorities for the Condition and Features of the Home

Use this step to forecast your future and think further than the next year. Have an honest conversation about how long you'll stay in the new home and what features it must have to accommodate your changing family during that time.

Many buyers begin by making a list of "needs" and "wants." Rarely do home buyers find a property that checks every box for features on the resale market, so it's crucial to identify which features are critical and which ones you can compromise before beginning to tour homes for sale.

5. Choose Your Ideal Location

Yet, you must also think about other things you want from the new home. Identify things such as where you want to work, school districts you like, and shopping and recreational opportunities you wish to have close to your house. For more information, check out our blog on How to Decide Where You Want to Live in Mid-Missouri

6. Familiarize Yourself with the Local Real Estate Market

Understanding your local real estate market will give you a better idea of what to expect when shopping for homes. Our free Monthly Market Updates are a fantastic resource if you are looking to buy in the Mid-Missouri Region.

7. Interview Real Estate Agents

Working with experienced Buyer Specialists gives you powerful advocates on your side during the entire home-buying process. Quite candidly, there are many REALTORS® to choose from, so be sure to research and interview any potential candidates before picking the one that works for you.

Closing Thoughts

Whether you're a first-time homebuyer or you've bought countless homes, following our steps above will set you up for home-buying success before you even begin touring homes.

Our friendly local real estate professionals have helped many people buy homes in the Mid-Missouri Region. We feature a team concept and clear division of responsibility, allowing each team member to perfect skills within their area of expertise, and provide our clients with what we call "Simply Exceptional Service."

Would you like more information about the home-buying process? Or perhaps you'd like to know more about what our team can do to help you find your next home. Either way, contact us by phone or the form below with any needs or questions you may have, and we'll contact you shortly!

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