Buying a home is one of the biggest investments you’ll make in your life. It can be stressful, but it can be very rewarding and exciting, too. Being prepared and getting your ducks in a row in advance can make the process easier. That’s why I recommend taking these steps a full year before you’re planning on buying a new home.
Check your credit
Your credit score matters – a lot – when it comes time to getting a mortgage. The lower the credit score, the higher the mortgage rate, which means more money in interest to pay over the life of the loan. For example: Compared to a homebuyer with a score of 760-850, a homebuyer with a score of 680-699 will qualify for a mortgage approximately 0.4% higher, which translates to $20,000 more in interest over 20 years on a $244,000 mortgage, according to Forbes. If you could, wouldn’t you rather take some time to improve your credit score and qualify for a lower rate instead of paying an extra $20,000 to the mortgage company? Of course!
Fortunately, a year is enough time to make significant improvements to your credit score if necessary. You’re entitled to a free annual credit report from the three major credit bureaus, TransUnion, Equifax, and Experian, so start by requesting a credit report from one of them. These bureaus also have advice on what to do to raise your score, such as making sure to make all your payments on time, reducing credit card balances, and so on.
If you’re happy with your current credit score, great! Just don’t do anything to jeopardize your score in the meantime, like missing payments, taking out a car loan, or maxing out your credit cards.
Figure out your mortgage and money situation
If you’re planning on getting a mortgage to buy your new home, you’ll want to figure out how much you could qualify for and what your monthly payment would be. At this early stage, you may want to try some online calculators to give you a ballpark figure, or you may want to chat to a mortgage professional instead.
A year out is too early for a preapproval letter, which is usually only good for up to 90 days. But you may want to ask for a prequalification letter, which is an unofficial document saying how much the lender might be willing to lend you. With this information, you’ll know how much to budget for your new home.
If you’re planning to pay cash for your home, determine how much you have to comfortably spend on a new property.
Account for moving expenses
Keep in mind that apart from the purchase price and closing costs on your new home, the process of moving itself costs money. From boxes and packing tape to movers, it can cost hundreds or thousands of dollars. Don’t overlook that money when budgeting for the next year.
Depending on where your work or the reasons for your move, your employer may cover all or part of the costs of your move. Find out now if you can expect to be reimbursed for moving expenses so you can plan ahead.
Search for your dream home online
Finally, the fun part! Now that you have an idea of what your money situation looks like, you’ll know how much you have to spend on your new home, which means you can start actually looking for it. With MLS listings on multiple websites, it’s never been easier to do research on your own to start zeroing in on the neighborhood(s) you want to look in when the time comes.
It may help to make a list of must-haves, nice-to-haves, and dealbreakers in a new home to help you as you search. Things to consider: cost, HOA or regime fees, location, school zone, square footage, lot size, number of bedrooms, year built, garage, and so on.
Find an experienced real estate agent to work with
Since the average time to find and buy a home is anywhere from one to six months, talking to a real estate agent a year in advance isn’t as early as it seems. A qualified real estate agent in the area you’re moving to can keep you informed on the latest news in their market and point you to neighborhoods you may not have previously considered.
Selling your home? Do these things, too!
If you’re planning on selling your home in a year, check out this list of things to know and do 12 months before selling.
Get help buying a home in the Charleston, SC area
Thinking of buying a home in the beautiful Lowcountry? If so, give me a call. My name is Kenton Selvey and I’m a Realtor who helps families in the greater Charleston area buy and sell homes. Even if you’re not planning on moving for a year or more, I’d love to talk to you about what you’re looking for in your dream home. Call me at 843-806-7222 or email me here and let me know how I can help. I look forward to hearing from you.