1. Prepare your credit
Your credit score is one of the most important factors in determining the loans you’re eligible for and the interest you’ll have to pay. Start building your credit score early by always paying bills on time, paying down your existing debt, keeping old credit card accounts, and avoiding too many new credit card applications.
2. Start saving
The down payment of a mortgage can be a significant sum, often in excess of $15,000, based on the amount you borrow. Though there are some alternatives to lower your initial down payment, these often come with additional fees and higher interest that cost you more in the long run. To make the most efficient use of your assets, consider creating a plan to save the full down payment amount over three or four years.
3. Get pre-approved
Once you’ve built credit and saved for your down payment, it’s generally a good idea to be pre-approved for a loan before making an offer on the home you’re interested in. Pre-approval is a commitment from a lender to provide you with the amount you applied for, and it tells sellers that you can follow through on the offer you make. Make sure to collect and prepare necessary documentation well in advance, including tax returns, pay stubs, bank account statements and any other documents.
4. Make an offer
Once you have your finances in order, you’re ready to find a realtor and make an offer on the home you’ve chosen. A reputable realtor should be able to guide you through the home buying process, tell you whether an offer is realistic and help to prepare you for closing.