SAN ANTONIO – Buying a house is scary when you have no idea what to expect, but there are some steps you can take to make sure you're prepared for what's ahead.
The Consumer Financial Protection Bureau has some tips on what to do before making an offer on a home.
First, check your credit scores. Lenders use these scores to determine if someone is a good candidate for a loan and also to figure out what interest rate to offer a borrower.
Next, assess your current spending situation. Buying a new home means more expenses, so you’ll need a clear understanding of where your money is going.
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Once you have a better picture of your spending habits, the CFPB recommends coming up with a budget to decide how much you can afford to spend on a monthly mortgage payment.
If you set aside money to put toward a house, you can determine your down payment for the home after learning how your finances work. You’ll need to figure out how much money you’ll need for moving expenses, closing costs, utility setup fees and all the other costs that come with buying a home.
You also need to figure out how much to spend on your new home and decide if now is the right time to buy. Compare home prices in your target area. If prices are higher than what you can afford, you may need to explore other neighborhoods or adjust your search criteria.
If you can’t afford your ideal home in the area you want, you may need to wait until you can save for a higher down payment.
The CFPB says those looking to buy a new home should make a list of friends, family members, co-workers or other people they trust who have purchased a home or refinanced a mortgage recently to help them through the process. A housing counselor may be helpful for first-time buyers.
Finally, create a loan application packet to start exploring your loan choices. The packet will need to have information lenders need to determine how much you can borrow and your interest rate.
For more information from the Consumer Financial Protection Bureau on home buying, click here.
WATCH ALL PARTS OF THE “MONEY: IT’S PERSONAL” HOME BUYING SERIES BELOW:
Part 1: What to do before you make an offer on a home
Part 2: Tips on exploring mortgage loans to purchase a new home
Part 3: How to compare mortgage loan offers
Part 4: Tips for navigating the closing process when buying a new home
