You've decided that it's finally time to buy a new home but just because you've made up your mind, doesn't mean you're ready. It's important to have an idea of what you should be doing as you count down to homeownership. To give yourself adequate time to search, start a financial file at least 6-months before you intend to make an offer. Gather up your 1099's and your last 3 year's tax returns, 3 recent paystubs, and a list of your liabilities and assets. Lenders are going to ask for these documents when it's time to get pre-approved for a loan. At the same time, you should be getting an idea of what kind of loan you're after. Bone up on the difference between 15 and 30 year loans and the cost of homeownership beyond the principle and interest every month. It's also a good time to talk to a lender about what you're closing costs and down payment will look like. This is also a crucial time to avoid dings to your credit score.
Holden Lewis, Mortgage editor, Bankrate.com: "There might be a cut off of say, 740 credit score, and you might go from 742 to 739. And that can make a big difference in fees you pay. How much of a difference? You know, it might amount to say, $10 a month or… 30. But over the course of 30 years that could really add up to thousands of dollars."
At five-months, it's time to put together your "wish list". Very specifically write down the qualities that you must have in your new home. This will help in the weeks to come.
When you have 4 months left, it's time to narrow your search. Start directly comparing properties for their price and features on that wish list. If your wish list is proving to be a little too long for your price range, figure out what features you can sacrifice.
When you're in the final three months, it's time to hire an agent and finalize your financing. Ask your agent to put you on an automated list, that way, when a property becomes available that meets your needs, it's send directly to your e-mail.
The last month is a crucial time so make sure everything up to this point is in order.
Holden Lewis: 'In that last month before you're going to make an offer on a house, just take another look at your finances. Do a double check. Find out if there is anything incorrect on your credit report. Find out your credit score and make sure your credit score is what you thought it was. And just make sure you have all of those financial records in order and right there at the ready to give to a mortgage lender."
Finally, it's time to make an offer. Make sure your offer includes details like the fact that you've already obtained financing and how soon you'll be ready to close. It's been a long road, but you're finally ready for closing day. For more home-buying tips, including what you should do to prepare for closing day, visit Bankrate.com. I'm Lucas Wysocki.