What You Need to Do Before Buying Your First Home

Family moving into new house

Before you buy a home, there are many things you should consider that could save you money. Purchasing a home is a very large investment and takes a lot of preparation, so you’ll want to make the smartest decisions possible.

Here’s a helpful list to get … homebuying.

Check your credit report.

Consumer Financial Protection Bureau recommends checking your credit before purchasing a home. You may have forgotten about an old credit card and defaulted on payments, which could negatively impact your credit score. You may also detect inaccuracies, which can take time to dispute. Make sure your credit score is high enough to qualify for a loan at a low interest rate. Visit AnnualCreditReport.com to view your free credit report. If your credit is not where it needs to be, you will want to improve your score.

Get preapproved for a mortgage loan.

This is an important step in the process because some Realtors will not work with you otherwise.  Find a mortgage loan officer at your financial institution to see what mortgage loan programs they have to offer.

Chose the right real estate agent.

Using a real estate agent is recommended, especially for first-time homebuyers. The home buying process can be long, daunting and requires a lot of paperwork. Realtors can make the process a lot easier and ensure all items are completed legally and timely.

Find a home that fits your budget.

Home expenses should not break the bank. Be realistic with what you are comfortable spending on your monthly mortgage loan. Also keep in mind the additional costs of insurance, taxes, homeowner’s association fees, maintenance, electric and water bills, etc. Figure out what you can afford, and be willing to walk away from a property that you cannot afford. Use a mortgage loan calculator to get an idea of what your monthly payments would be if you bought today. Include taxes and home insurance in your cost.

Calculate your closing costs.

They can add up quickly. Homebuyers in Hawaii can expect to pay between 3 and 5 percent of the purchase price of the home. Closing costs include the lenders fees, title, settlement fees, taxes, prepaid items such as homeowners insurance or Homeowners Association Fees.

Research the neighborhood.

One of the most important aspects of choosing the right home is location! Drive by the home at all hours of the day to see what is happening in the neighborhood. You will want to look into many factors, such as the distance to work, nearest grocery store, schools in the area and traffic patterns. Also, you’ll want to learn how safe your neighborhood is by checking the criminal activity  and the National Sex Offender Database.

Get an inspection.

A home inspection may cost a couple hundred dollars upfront, but could save you thousands in the long run. A home inspector may find issues with your future home like plumbing, wiring, etc. An inspection is a very wise investment.

Gather important documents.

Collect pay stubs, bank account statements, W-2s, tax returns for the past two years, statements from current loans and credit lines, and names and addresses of your landlords for the past two years. This can save the lender time.

Purchasing a home is one of the biggest and most exciting financial decisions you can make. While the home buying journey can seem complicated, rest assured you are not alone.  To help you avoid some of the common mistakes first-time homebuyers often make, be sure to talk with a lender and use the many free resources that are available online.  The more you educate yourself on the home buying process, the more confidence you will have in making a smart financial decision.

 

 

 

Financial Educator, Jennifer Russo headshot

About Jennifer Russo

Jennifer Russo is Hawaii State FCU’s financial educator. She develops, markets and delivers financial resources to members under the credit union’s financial literacy initiative. She also works with community partners to develop strategies addressing the unique needs of Hawaii’s diverse population.

Jennifer has more than 15 years of experience in marketing and program management within the federal government and private industries. She received her Master of Business Administration from Colorado State University in Fort Collins, Colorado, and holds a bachelor’s degree in mass communications and public relations from McNeese State University in Lake Charles, Louisiana.

Related Posts

Back to Top
Third Party Site Disclaimer

We may provide links to external websites that refer to third party services and products available to Hawaii State FCU members. Please review the terms and conditions of use carefully. Such services and products are not obligations of, nor endorsed or guaranteed by, Hawaii State FCU nor the National Credit Union Share Insurance Fund. We do not make any express or implied representation or warranty to you concerning the quality, safety or suitability of external websites, or their services or products. Alternative services and products may be obtained from other providers of your choice. External websites are not under our control and may have different policies and security. Using the links may identify you as a Hawaii State FCU member to the external website operator.

Click “ACCEPT” to enter an external website. Click “Cancel” to return to HSFCU’s website.

Please remember to log off of Online Banking and Mobile Banking before going to any external website

Cancel Accept