Easy Home Buying Timeline and Guide

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Easy Home Buying Timeline and Guide

So, you may have been thinking about transitioning from renting to buying your own home. The benefits of home ownership can be rewarding and exhilarating for certain. But, the prospect can seem overwhelming and at times unattainable. However, if you focus on your goal and follow a guideline you could be on your way to owning a house in as little as a year. Here is an easy home buying timeline to help you avoid common mistakes and simplify the whole process.

12 Months

Get Your Credit Score in Check

Financial advisers recommend that you go to the three credit bureaus to attain your scores. You can do this online at Annual Credit Report or Credit Karma. The three credit bureaus are required by law to provide a free credit report once a year. Go through your report with a fine tooth comb. The Federal Trade Commission accounts that, up to one in four Americans finds errors. Consequently, these errors could be negatively affecting your credit. Work diligently to dispute and correct any mistakes. Doing so improves your overall score, which is beneficial when going through the mortgage pre-approval process.

Figure Out How Much You Can Afford

Lenders only look at your debt to income ratio. A bank looks for a total debt load of no more than 43% of your gross monthly income. These debts include credit cards, student loans, car payments, and the like. They do not take into account extraneous expenses like child care, vet bills, or entertainment costs. Don’t make the mistake of becoming house poor. Now is the time to sit and seriously consider your finances. Ask yourself, how much do you really want to afford? Make sure you have a cushion that allows you to save for emergencies. Use a financial worksheet to figure it all out. And, most of all be honest.

Formulate Your Down Payment Strategy

The standard down payment for most conventional mortgages is 20 percent. However, there are programs available that can help. Through The Federal Housing Authority (FHA) you may find loans requiring only a 3.5 percent down payment. However, know that a lower down payment can mean mortgage insurance, which drives up your total monthly payment. Therefore, you need to consider this when calculating what you can afford. Many employers offer assistance programs. Plus, the U.S. Department of Housing and Urban Development (HUD) has lists of non-profit home buying assistance programs listed state by state. Once you research all of this, it is imperative that you begin building a savings account. Lenders like to see that you have had stable funds for at least 60-90 days before applying for your loan.

9 Months

Prioritize House Features You Desire Most

Start making a list of the qualities you want in your new home.

  1. Close to work?
  2. A good school district?
  3. A big backyard?
  4. Private community or city neighborhood?
  5. An open floor plan or an older fixer upper?

Now is the time to work out any differences and be specific about what you most want. Know what compromises you are willing to make, and what you won’t budge on BEFORE you start looking. That way, you don’t waste valuable time looking at homes you are not going to end up buying.

Do Your Homework

Research neighborhoods, public transit, taxes, cost of living. Even though you may not have officially started looking, start attending open houses. Doing so will give you a good idea of what kind of houses are in your price range, and what neighborhoods you like the most. This serves as motivation to keep reducing debt and save for your down payment.

Start a Home Buying/Maintenance Savings Account

So, you are saving for a down payment, and that is great! However, what happens once the ball gets rolling? Will you be able to afford extras like inspections, surveys, or insurance? What if your new neighborhood requires association fees? Will you be prepared for any immediate maintenance or repairs that you could incur as soon as you move in? Start another savings reserved for these miscellaneous expenses. As always, prepare for the worst, while hoping for the best.

6 Months

Paperwork, Paperwork, Paperwork

Did we mention there is a lot of paperwork involved in buying a home? About six months before your goal start gathering all of your loan paperwork. Organize it now, which vastly improves the loans process. And another bonus? Gathering all your financials now is another helpful way to stay focused on saving.

  • W-2 forms — or business tax return forms if you’re self-employed — for the last two to three years
  • Personal tax returns for the past two to three years
  • Most recent pay stubs
  • Credit cards plus all loan statements
  • Bank statements
  • All addresses for the past five to seven years
  • If applicable, brokerage account statements for the most recent two to four months
  • Most recent retirement account statements, such as 401(k)

Research and Interview Lenders, Realtors and Buying Agents

Remember that you are in charge of your home buying experience. Do your research. Make phone calls. Speak to agents, dealers, brokers, banks, even title companies. Spark connections and build trust. These folks are assisting you with what is potentially the largest purchase of your life to date. Ask lots of questions. Consider they are the experts in the field. They also may have reputable connections who could be instrumental during your process.

3 Months

Get Pre-Approval for Your Mortgage

You’ve put in the time to gather all your paperwork, get your finances in order, check your credit reports, and start saving. You’ve researched and interviewed lenders and buying agents. Now it is time to get real. It is mortgage pre-approval time. Make an appointment with your lender and bring all of your paperwork. They will run a credit report, look at your finances and estimate how much you are approved to borrow. It makes sense to borrow less than the maximum so that you can live comfortably.

Start Shopping

Once you are pre-approved, you will be able to target neighborhoods and homes in your price range. This is the fun part!

2 Months

Make an Offer on a Home

It may take from 4 to 6 weeks to close on a house. If you have a firm move out date in your current location, make sure you have enough time for any last minute hiccups.

Order a Home Inspection

Things are moving at a rapid pace now. As soon as your offer is considered, you need to get an independent home inspection. That way, if any issues are discovered there is time for repairs.

The Last Month

Get All Paperwork Organized

  • Triple check that all of your paperwork is in order. This is where a good title company can help.
  • Organize all inspections and surveys.
  • Contact your lender to ensure your financials are in order.
  • Review any mortgage documents.

Purchase Home Owner’s Insurance

Do not forget to secure this before the closing. You will need proof of insurance to finalize the purchase.

Schedule a Final Walk-Thru

About a day or two before your closing schedule a final walk-through of your new home. At this point make sure everyone is on the same page as to the shape and condition you have agreed on.

Secure Your Funds for Closing

Go to your banks and get a cashier’s check or arrange a wire transfer. Regular bank account checks are not accepted. Make sure you get the exact amount needed for closing.

Buying a home is both an exhilarating and daunting process. However, tools like this home buying timeline help. Further, making sure you surround yourself with a team you trust makes all the difference. Railway Title is committed to helping you keep the home-buying process on track.

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