Owning a home can be a rewarding experience, but it’s important to prepare for this major milestone. Carefully weigh the pros and cons of purchasing a home versus continuing to rent, and determine whether buying a home is the right decision for you and your family.
2. Look at the big picture
While buying a house can be a rewarding, it can be labor intensive and expensive. Leaky roofs, plumbing issues and other home repairs can add up. Consider the cost of general maintenance and unexpected expenses when determining if you’re ready for home ownership.
3. Check your credit
Take a look at your credit report and FICO score. They will
impact your overall loan costs. Our loan specialists will comb through it for any errors or unresolved issues and contact the appropriate credit-reporting bureau—Experian, Equifax and TransUnion—to ensure they are corrected.
4. Get pre-qualified
Your Firstar Financial Mortgage loan officer can help you determine the loan amount you might qualify for through a pre-qualification process. Being pre-qualified before searching for a home is very useful because it helps you look for homes within your price range. Real estate agents also appreciate buyers who submit offers on homes with a pre-qualification letter.
While pre-qualification can serve as a guide to what’s affordable, it’s equally important that you feel comfortable with your monthly payments. Before applying for any loan—and especially for something the size of a mortgage—it’s important to determine how much you can afford to pay each month. Look at all current monthly expenses, as well as how much you save each month. Typically, it’s recommended that you spend no more than 28 percent of your monthly income on housing expenses, including your mortgage, taxes and insurance costs. Our mortgage calculator can help estimate the cost of your monthly payment so you can set a budget that works for you.
6. Don’t forget taxes and insurance
Contact a local insurance agent for an estimate on a comparable property in the area you’re considering. To get a better idea of what you’ll pay in taxes, check the local property assessor’s website. Remember that the amount of taxes a homeowner is currently paying and what you can expect to pay may differ depending on exemptions and local tax laws.
7. Putting money down
Most mortgage programs require you to make a down payment when you purchase a home. The amount of the required down payment will vary, depending on the type of mortgage program.
8. Begin your home search
Decide on a location and identify the features you want in a home. Check local listings, compare prices of similar homes and consult with your real estate agent to help determine the amount you can expect to pay. If you’re not already working with a real estate agent, consult with friends, neighbors or a local real estate agent association for help finding one that specializes in housing options in your area.
9. Loan application process
In addition to determining the type of mortgage you’d like to pursue and determining your interest rate, gathering the right documents is a critical step that can save time and frustration down the road. To ensure a smooth loan application process, you’ll likely need to collect:
Name and address of employer(s) for the past two years
Pay stubs for the last 30 days showing year-to-date and current period earnings, as well as any documentation of additional income
Checking, savings, retirement and investment account statements for the past two or three months
Credit cards, loans and other debt-related documents
10. Closing the deal
Once you’ve found the home of your dreams, there are steps related to sealing the deal, including negotiating a purchase price, getting an appraisal and scheduling an inspection. Once you and the seller reach an agreement, you’ll want to consider closing costs. They typically include origination fees, title and settlement fees, taxes, and prepaid items like homeowner’s insurance or association fees. Your realtor can help you determine all property-related costs.
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