6 Must-Do's Before Buying a Home

You might be ready to buy a home, but are you armed with the knowledge you need? Do you know about credit score requirements? Are you familiar with flexible standards on Federal Housing Administration loans? Whether you are a first-time homebuyer or an experienced owner, buying a house requires a "preflight check."

Here is a five-item checklist, including tips on two types of savings you need, plus advice about what's more important than buying a house for its resale value.

1. STRENGTHEN YOUR CREDIT SCORE
*One old rule still applies: The higher your credit score, the lower your down payment and monthly payments. Below 660 or 680, you're either going to have to pay sizable fees or a higher down payment. Improve your chances by pulling your credit reports and ensuring you're not being unfairly penalized for old, paid or settled debts.

2. FIGURE OUT HOW MUCH HOUSE YOU CAN AFFORD
*Get a home that's financially comfortable! Before you home shop, calculate the mortgage payment for the home in your intended price range, along with the increased expenses (such as taxes, insurance and utilities). Then bank the difference between that and what you're paying now. Not only does it allow you to build a nice nest egg, but "you can back away from it," or scale back, if the payments start to pinch.

3. SAVE FOR DOWNPAYMENT AND CLOSING COSTS
*Depending on your credit and financing, you'll typically need to save enough money to put anywhere from 3.5 percent to 20 percent down. If you're using FHA financing, then you need a score of 500 or higher. And in the 500 to 579 range, if you can find a lender, you'll have to put 10 percent down instead of 3.5 percent.
Another cash expense: closing costs. Whatever your loan source, you'll also need money to pay closing costs, which run (depending on where you live), from $2,300 to $4,000

4. BUILD A HEALTHY SAVINGS ACCOUNT
*This is over and above your money for the down payment and closing costs. Your lender wants to see that you're not living paycheck to paycheck. If you have three to five months' worth of mortgage payments set aside, that makes you a much better loan candidate. That money will also help you with maintenance and repair issues that come up when you own a home. While repairs are sporadic, items such as a new roof, water heater or other big-ticket items can hit suddenly and hard.

5. GET PREAPPROVED FOR A MORTGAGE
*Before shopping for a home, make sure to get your financing in place. The last thing you want to do is shop for homes, find the home of your dreams and then realize that it is way out of your price range -- a real downer. Be realistic and take this important first step before venturing out to house hunt.

Please feel free to call and/or email me with all your real estate needs, including getting preapproved for a mortgage. Whether you are buying or selling in PA, or elsewhere, I can help.