How I’m Preparing to Buy My Next House

I am always looking at homes online and keeping track of the current housing interest rates. You would think I’m about to buy a house tomorrow. I am that person who will stop when I see an open house sign on a Sunday afternoon. I just love beautiful homes and interiors. I don’t have any plans to move this year, but if an opportunity presents itself, I want to be ready.

I thought that I would only be in my current house for five years when we first purchased it, but after seven years, we are still here. I actually like my house, but sometimes I envision myself in a different neighborhood, or in a house with a different layout. I would love a house with a dedicated yoga room or an open-air art studio, and perhaps a double-height ceiling loft style interior, where I can lean over a balcony (while sipping a cup of tea) to see what is going on in the living room beneath me…you know, just things that aren’t in my current home.

To be honest, I don’t know if we’ll ever move, but if we do, here’s what I’m doing to be prepared.

I’ll Ask Myself…Can I Really Afford This?

When I spot my house, I need to be honest with what I can afford. I have to take into consideration all costs such as insurance, property taxes, maintenance and repairs when looking for my new home. And I know I will want to furnish my new home with items that fit with the flow of my new house.

I don’t want my new home to drain my bank accounts, so before I buy a house I have to take a hard and honest look at my finances. I know a ballpark of what I will spend max on my next house, so I have to make sure my goals and finances align. I have to ask myself, can I really afford this?

Credit Checkup

I’m keeping my credit score high. Having a 740 or better credit score it good, but my goal is to keep it higher than that. In order to get the best interest rate possible, I’m maintaining a high credit score. This means keeping my oldest cards open, and using my credit wisely. I won’t be applying for any new credit loans, and I will make sure my debt-to-income ratio is low. For me, this includes not having a car note. I will continue to keep an eye on my credit report (using Credit Karma), and I use my credit wisely. Also note, you can get a free credit report once a year.

Stay on Top of Savings

I’m making sure that my emergency fund has at least three to six months of solid living expenses first before I even think about purchasing my next home. I will keep this money in my High Yield Saving Account, so when I’m ready to access it (if I ever need to), it will be there.

Down Payment

I know I’ll need a nice down payment. Even if we sell our current home, and use that money towards a down payment and closing costs, my goal is to have my new mortgage no more than my current mortgage payment. So, I want to be able to put down as much as possible…at least 20% of my new home’s price.

Other Steps

Along with making sure my credit score and finances are up to par, other things I need to consider with buying a home include:

• Finding a mortgage lender
• Getting pre-approved for the mortgage
• Finding a reputable real estate agent
• Finding my new home
• Getting a home inspection/appraisal
• Submitting the mortgage application
• Closing on the home

These are the steps I use whether I’m buying a primary residence or an investment property. But I am getting the itch to buy some real estate soon.

Property ownership is a great wealth builder but it can also be a burden, so just make sure you are investing in an area that will likely yield profits and not headaches.

I’m about to go transfer $20 right now to bump up my savings account, so I’m a little closer to my new home purchase. Every dollar counts!