Work PhotoBy Liz Rainey

(314) 749-3956 – liz.rainey@upperendproperties.com

Check Your Credit

Lenders rely heavily on your credit report, and your score will determine the size and the interest rate of the loan.  Typically a 620 minimum credit score is required to qualify for a home mortgage.

If you have had late payments, debt, liens, etc., now is a good time to get back on track by paying bills on time and paying down high interest rate credit cards.

You can obtain free copies of your credit report through Equifax, Experian, and TransUnion.

Start Saving

Now that you have worked on your credit, view your savings to see if you have enough money for a down payment and coverage of the monthly mortgage.

The best case is that you are able to put down 20%; some lenders will allow you to put down as little as 5%.  Keep in mind that the smaller the down payment, the higher the loan amount therefore the higher your monthly payment will be.

If you do not put 20% towards your down payment you will need to purchase private mortgage insurance (PMI).  PMI insurance can add a substantial amount to your monthly payment.

Determine How Much You Can Afford

The general rule of thumb is that you can afford a home that is 2-3 times your gross annual income.  Keep in mind that you will also have to pay for insurance, property tax, utilities, maintenance, and other everyday living expenses.

Determining what you can afford will help eliminate looking at places out of your price range and falling in love with a home that you will not be able to afford.

Get Prequalified

If you don’t have a lender, ask your real estate agent for recommendations.  Speak to your lender in order to gather the needed paperwork.  Typically you will need W-2 forms, pay stubs and monthly bank statements.  If you are self-employed you will need personal & business income tax returns for the previous 2 years.  The lender will let you know how much you are qualified to buy and will provide you with a pre-approval letter.  Your lender will review financing options and determine which type of loan works best for you.

Narrow Down Where you Would Like to Live

There are a lot of great neighborhoods in St. Louis so this can be a difficult decision.  Do you need to be concerned with the public school system?  How long of a commute would you like?  Do you want to be close to parks, downtown, etc?  Is house size more important than location?  Come up with a list of 3-5 neighborhoods in which you would like to live.  You can always expand your search if you need to.

Determine Your Must Haves & Wish List

Sit down and make a list of things that you must have (two car garage,main level washer & dryer, e.g.).  Also make a list of items that would be nicebut aren’t necessary such as a finished basement or a pool.  This will help your realtor search for your dream home and not waste your time viewing properties that don’t fit your needs.

“Hidden” Costs

There are a few costs that homebuyers don’t initially think of such as closing costs, inspection fees and title fees.  These costs are separate from the household needs and extras you will need once you move in.  Make sure to properly budget for these items and those unexpected items that are sure to come up during your move.  This will help keep the move as stress-free as possible.

Moving can be a great experience, especially if you plan ahead.  Following these steps can help keep you on track make your move as calm as possible.

Bookmark and Share