How to Prepare for Buying a House

  • Bonnie Spindler
  • 02/2/15
When you’re thinking about buying a house, you’ll probably make lists of features you want in a home, drive around different neighborhoods to explore styles of homes, and start looking into real estate agents to help you throughout the entire process. While all of these considerations will absolutely aid you when buying a house, there are a number of other specifications to think about.
 
Buying a house—especially if you intend to finance the purchase—is a huge, long-term commitment. If you are concerned about your finances at all, you should start planning for this investment anywhere from a few months to a year ahead of time. While we can help you with negotiations, paperwork, and finding the right financial institution for buying a house, there are a few steps you should be taking on your own.
 
To make sure you are prepared for buying a house, you’ll need to get your finances and paperwork in order. Here are a few things to consider before you fall in love with a home that you cannot afford.

Work on Strengthening Your Credit Score.

If you are planning on applying for a mortgage, you will want your credit score as high as possible. Why is that? A lower credit score shows that you are a financial risk for a bank or other institution. You may not get approved for a mortgage with a score lower than 580‒620. If you do happen to get approved with a lower credit score, your interest rate could be exponentially higher, causing you to pay much more for the house in the long run. A credit score in the 700‒720 range is considered good, but 750 or higher is much better.
 
How do you strengthen your credit score? If you’re thinking about buying a house in the future, stop applying for new credit at least a year before you want to finance a home. Make sure you are paying more than just the minimum and that you are making all of your payments on time. Take a close look at your credit report to spot any unfair penalties that may be lowering your score. If possible, pay off any existing debts before buying a house.

Figure Out How Much You Can Afford.

One of the greatest tools for this is a mortgage calculator, allowing you to estimate your mortgage payment. Of course, your actual rate and payments will be determined by your bank or financial institution, but this is a good starting point. It may help to go get pre-approved for a mortgage so you know exactly how much you can afford before you even walk into a house.
 
Take into consideration your income and other mandatory expenses, such as a car payment or insurance. Keep in mind that you will likely be paying more in taxes, utilities, and homeowner’s insurance as well.

Start Saving Your Money.

If you aren’t already doing this, open up a savings account and set aside a certain amount of money every month. Don’t touch it. Understand that down payments can cost anywhere from 3‒20% of the home’s selling price, and closing costs are upwards of $2,000‒4,000. Make sure you’re saving money for emergencies and unexpected expenses associated with buying a house.
 
Whether you’re ready to buy a house or just starting to think about the possibility, the real estate team at Bonnie Spindler can help. You’ll be in good hands with one of San Francisco’s top producers. Learn more about the entire process of buying a house below.
 
 

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