The Ultimate Guide to Buying Your First Home in One Year

Moving out of your parents’ place. Ditching your loud, expensive apartment where you’re not building equity. Being able to decorate how you want. All of these circumstances fuel the daydream of buying your own house.

You may not realize it, but the idea of buying your first home is closer than you think. In fact, if you start now, you can be a homeowner by this time next year!

Are you skeptical? Read on for the ultimate guide to buying your first home in one year.

 

 

Wrestle Your Finances Into Submission

A year before purchasing a home, review your finances and get them under control. Start paying down your credit cards first, and then tackle your other debt. Addressing this now will be the golden ticket to securing a mortgage when you need it.

Save ‘Til It Hurts

Start planning for your down payment, which is an integral part of buying your first home. Squirrel away as much cash as possible. A year in advance gives you time to cut out non-essentials and use that money to build your down-payment fund. Downgrade your cable and cell packages, take your lunch to work, and limit shopping trips. You might want to freelance or find a part-time job to make extra money to add to your account.

Check Your Credit Report

Don’t wait until you’re trying to get approved to look at your credit report. Pull all three bureaus from www.annualcreditreport.com. Examine each line, make sure there are no errors, and be sure that all accounts showing are actually yours. Dispute anything that’s incorrect (which can take up to 90 days).

Create A Realistic Budget

Once you look at your bills, write out a budget based on your or your family’s take-home income. Be realistic about your spending and remember to plan for big-ticket items and emergencies. Use your previous spending patterns to determine how much money it takes to run your household.

 

 

Determine How Much House You Can Afford

Don’t assume that affording a house is the same as affording rent. It’s not. In addition to the monthly mortgage payment, you will have taxes, insurances, and repairs. Use an online calculator to figure out the price range that fits your budget and resolve to stay within it.

Lay Out Your “Must Haves“

You most likely won’t be able to afford your dream home, but you can get several of the features you want most. Make a list of 3-6 attributes that you can’t live without. Love a one-level floor plan? A garage? A hip neighborhood? Keep in mind you may not get them all, but this list can guide you to the homes you should be visiting.

Gather the Documents You Need for A Loan

Track down your W-2s for the last two years, your tax returns, copies of your bank accounts, and records of any other assets. You’ll also need to take valid identification and be prepared to share the name, address, and phone number of your employer.

 

 

Connect with A Real Estate Agent

Choosing the right agent is essential for your home-buying process to go smoothly. Six months before you plan to purchase a home, start asking friends and co-workers for referrals. Don’t be afraid to interview multiple agents to find one you’re comfortable with.

Choose A Lender and Get Pre-Approved

As with your real estate agent, your mortgage lender is crucial to the process. Find one that’s professional and who answers all your questions. Avoid those who won’t return your calls or seem too busy. Work with them to get pre-approved and to understand the mortgage programs available to you 4-6 months before purchasing your first home.

 

 

Start Shopping!

Now is the fun, terrifying part. Work with your agent and start visiting the homes that are for sale in your price range. Aim for the neighborhoods you like and the ones that offer your “must have” amenities.

Make An Offer

Be prepared to proceed when you find a house that meets most of your criteria. Listen to your agent on what to offer and add your pre-approval letter and an earnest money check to show that you’re serious about buying the home.

Prepare for Negotiations

Negotiations can be tricky and stressful, but stick to your guns, especially during a bidding war. Stay calm and don’t get so emotionally attached to a home that you agree to anything or bust your budget. You may go back and forth with the seller for several days before you agree.

 

 

Order A Home Inspection

Get the home inspected by a certified home inspector a month out. This gives the seller time to handle additional repairs based on what the inspector finds.

Secure Home Insurance

Compare prices and choose a company to provide insurance on your new home. You’ll need proof of insurance at closing.

 

 

Walk-Through the Home Before Closing

The week of your closing schedule a time to walk through your soon-to-be home. Look closely at every room, especially at things you asked to be repaired or replaced during negotiations. You should be confident the home is in the shape you and the seller agreed it would be.

Obtain Your Check to Take to Closing

A few days before closing, ask your closing agent for the amount of money you need to bring. Set up a bank wire or secure a cashier’s check for the exact amount of money you need. You won’t be able to use a personal check.

 

 

Attend Your Closing

Double check that you have all your documents ready. Pack them, your check, and proof of insurance into a folder to take with you. Make sure you know the way to the location of the closing. Arrive early and be prepared to sign your name dozens of times. When it’s over, grab your new house keys.

Move In!

Pack up and move into your new residence!