Buying a Home:  How To Get Started 

Whether you are tired of collecting rental receipts or ready to move out of your parents’ basement and own your own space, consider the following advice on how to prepare for home ownership:

1. Decide what you can afford. Generally, you can afford a home equal in value to between two and three times your annual gross income.  Learn more about income sources and expenses with my Budget Basics Worksheet

2. Develop your home wish list. Then, prioritize the features on your list.

3. Select where you want to live. Compile a list of three or four neighborhoods you’d like to live in, taking into account items such as schools, recreational facilities, area expansion plans, and safety.

4. Start saving. Do you have enough money saved to qualify for a mortgage and cover your down payment? Depending on the type of loan you qualify for your down payment can range from 0% with a USDA or VA loan to 20% of the purchase price for a conventional style loan.  Also, don’t forget to factor in closing costs. Closing costs — including taxes, insurance, title fees, inspections, recording fee, etc. — typically averaging between 2 and 7 percent of the home price.

5. Get your credit in order. Obtain a copy of your credit report to make sure it is accurate and to correct any errors immediately. A credit report provides a history of your credit, bad debts, and any late payments. Read about the Five Factors that Determine your Credit Score

6. Determine your mortgage qualifications. How large of mortgage do you qualify for? Also, explore different loan options — such as 30-year or 15-year fixed mortgages or ARMs — and decide what’s best for you.  Need help finding a lender?  Here are 10 questions to ask a lender before you decide. 

7. Get pre-approved. Organize all the documentation a lender will need to pre-approve you for a loan. You might need W-2 forms, copies of at least one pay stub, account numbers, and copies of two to four months of bank or credit union statements.  Click to review a Lender Checklist

8. Weigh other sources of help with a down payment. Do you qualify for any special mortgage or down payment assistance programs? Check with your lender on down payment assistance programs for first-time buyers. Or, if you have an IRA or 401K account, you can use the money you’ve saved to buy your fist home without paying a penalty for early withdrawal.

9. Calculate the costs of homeownership. This should include property taxes, insurance, maintenance and utilities, and association fees, if applicable. 

10. Contact a REALTOR®. Find an experienced REALTOR® who can help guide you through the process.  Give Lisa a call at 765.225.4123 or email her at