You did it! You found your person and tied the knot. Your special day is done, your honeymoon is over and now it’s time to snap back to reality and start living your married life together. But where will you live? If you’re thinking of becoming homeowners, there are a few to-do’s you should cross off the list before getting down to the business of house hunting (like seeking a mortgage preapproval.) We’ll walk you through them and the basics of searching for a home and buying one below.
Figuring out the basics
Start by asking yourself the hard questions.
Are we really ready to become homeowners?
The first step in home buying is making sure your finances are in order. In fact, some buyers begin their search by getting in touch with a lender to go over the numbers.
A good place to start is by checking your credit score. There are a number of ways to do this. At no cost to yourself, you can run a credit report at auditcreditreport.com annually, which will pull from three top agencies (Experian, TransUnion, and Equifax) without dinging your credit.
Reaching out to a lender is another way to get the ball rolling. Lenders can try to pre-approve you, which will be helpful when it comes time to make an offer.
If you find out your credit is less than optimal, either work with a lender to repair it, or take steps on your own. According to Experian, simple steps such as paying your bills on time (especially phone and utility bills), paying off debt or keeping low balances, not opening new credit accounts, not closing unused credit cards and disputing inaccuracies on your credit report can all make a difference.
How much house can we afford?
The next major step is figuring out how much house you can afford. A simple way to figure out an appropriate number is to use a Home Affordability Calculator, which will ask where you plan to buy, how much your gross income is how much you have saved, how much you carry in other expenses and what your down payment might look like.
How much should we have saved?
According to CNBC, there are a few costs you can expect along the way. Expect to pay anywhere from 3.5-20 percent for a down payment (however, there are mortgage options with lower down payments, talk to a lender), 2-5 percent in closing costs, moving costs, mortgage payments and 10-20 percent of the home’s cost annually for repairs and maintenance. And then you’ll want to make sure that you have a three to six-month cushion (to cover all living expenses) in case of emergencies.
Who should we talk to?
If you’re already working with an agent, ask the agent to recommend a lender who can help you figure out your personal needs, give you advice to put you in the best position to purchase and pre-approve you with a budget number in mind.
Don’t have an agent yet? HomeLight can help you compare agents and find one in your area.
House hunting
Now that you have an idea of what you can afford, it’s time for the fun part: house hunting. You probably have some idea of the area you want to live in, so now is the time to narrow it down.
Figure out what neighborhood or area of town is ideal. Your budget will definitely be a factor here, so start your search online. See what houses in your ideal neighborhood go for.
Also, sit down with your new spouse and make a solid list of must-haves and nice-to-haves. Must-haves are non-negotiables, the things you can’t live without. Nice-to-haves are those things that, when push comes to shove, you would like to have but could live without.
Having that list will put you on the same page as your spouse — and help your agent in aiding your search.
Once you’ve got all of this figured out, you might find that homes in your ideal neighborhood don’t have what you truly need, or that you can’t afford what you do have. That list might need to be revised from time to time. Watch basically any show on HGTV, and you’ll see that lots of compromises are made during the home search.
Maybe you look outside of your ideal area and find the homes that have everything you want; maybe you stick within your preferred area and compromise on some things on your list. Your agent will likely also set you up with a search and be independently searching for homes that meet your criteria.
When you find some good candidates, don’t waste time — go and look at them in real life.
Should we make an offer?
When you find the one, work with your agent to decide if it’s right for you. Your agent will create a comparable market analysis that looks at nearby sales and also consider what the home was last appraised at as well as how long it’s been on the market and the condition it’s in.
Using all of these data points, your agent will be able to tell you whether it’s a good investment for you and how much you should offer for it.
What’s next?
Once your offer is accepted, you’ll have a chance to do your due diligence, which usually means a home inspection and sometimes other inspections like radon or insect. You might renegotiate after the inspection.
Next comes the appraisal. The bank will want to make sure that the money it’s lending to you is a solid investment, so it will send appraisers out to check the condition of the home.
On closing day, where the ownership of the home will become yours, you’ll have an opportunity to walk through the house one more time to make sure it’s in the same condition as you had seen it before.
Then you’ll typically sit down at the closing table and sign papers with your lender and title company. At the end of the day, the home will be yours.
The next hurdle will be moving. But don’t worry, we’ll help make it easy and keep you on track with this moving checklist.
For more on the ins and outs of the home buying process, click here.