Shopping for a new home is exciting! It’s fun to tour homes and dream about how your family could live there someday.
But going house shopping isn’t the first step in the home-buying process, and starting there is a mistake many buyers – especially first-time homebuyers – make. Once you’ve made the decision to buy a home, here are four things you should do before you start looking at listings.
Save for a down payment. Owning a home is more than a house payment. Don’t use your entire savings on the down payment, Bankrate says. You need a rainy-day fund and money to pay for the other costs of owning a home, from furniture to repairs.
Check your credit. How’s your credit score? If you haven’t checked in a while, now is the time to do so – before you start applying for mortgages. When you check your credit report, Nerd Wallet says, look for errors and dispute them, and work on ways you can improve your credit.
Know what you can afford. You’re just setting yourself up for heartbreak if you shop before knowing your budget. You can use online calculators to get an idea of your potential budget, but the best tactic is to start talking with lenders and shopping for a mortgage.
Get preapproved. You can get prequalified for a loan, but it’s better to get preapproved. This is a more thorough process than prequalification, but having that preapproval letter shows sellers that you’re serious about buying their home.