Home Buying and Mortgage Tools

Before you contact a Realtor or mortgage lender, you need to know if your credit is good enough to qualify for a mortgage. This is the time when you should pull your credit report and take the necessary steps to ensure you have built up a sufficient credit history and that your score is as high as it can be. The higher your credit score, the better the mortgage rate you'll qualify for. This also will leave you plenty of time to correct any errors or inaccuracies on your report which may trip you up later.

Perhaps the most important question you need to honestly answer when you're thinking about buying a home is "How much house can I afford?" Take inventory of your monthly income versus your monthly debts as well as your savings to figure out how much you can put toward a down payment and how much you can afford to pay each month. Also, this is a good time to assess your future goals and plans to help you determine which loan product will best fit your needs.

After you determine how much house you can afford, you need to figure out what kind of home you need. What is important to you? What amenities does your home need to have? Does your home need to be in an area with great schools? Do you need to live near transportation hubs? How many bedrooms and bathrooms do you need? Do you want a house with a pool, an eat-in kitchen, a fireplace, a finished basement? Once you decide what you need and want, it is time to start shopping.

At this stage of the game, it's time to start researching the local housing stock. Cruise around the neighborhoods you're interested in, talk to other homeowners and store owners to see if a given neighborhood is right for you.

Viewing homes online is a good way to see what types of homes are available in a given neighborhood, but remember, online pictures can be very deceiving. Save yourself and your Realtor a lot of time by driving past the property before you agree to see it with a Realtor.

Homebuyers still name Realtors as their single, greatest source of information during the homebuying process. It's important to find a motivated Realtor you can trust. Engage your Realtors with questions, ask them about current market conditions, let them know when and what you want to buy. Keep in mind that the Realtor is bound by contract to act in the seller's best interest, not yours.

Also discuss what you're willing to sacrifice in terms of amenities.

Finding the right Realtor could make all the difference in your homebuying experience.

Once you've chosen the right Realtor, your research isn't over. Other professionals such as lawyers, insurance agents and home inspectors will be involved in your homebuying process, and you'll need time to shop around to find ones who fit for your needs. You won't necessarily need to hire them just yet, but you'll want to have a short list to work from once your transaction really gets rolling.

Now it's time to get your paperwork organized. This may take some legwork on your part. Mortgage lenders are going to require that you prove your income and your assets. That means showing them income statements, at least two years' worth of tax returns and statements from your savings account(s) and any investments you might have.

If a family member is giving you a cash gift to put toward your new home, you must present your lender with a gift letter from the person giving you the gift, stating that you're under no legal obligation to pay them back.

Once your paperwork is organized, it's time to research local mortgage lenders in your area and choose one that's right for you. After you choose your lender, it's time for the preapproval process (not a loan guarantee). You'll need to bring all of the paperwork that you've gathered.

Once you have been preapproved, it's time sign a sales contract. This process can involve offers and counteroffers.When the contract has been signed and your financing is in place, a closing date will be set. The day of the closing you should also schedule a final walk-through to be sure nothing has changed since you last saw the house. When you move into the new house, you'll need to have homeowners insurance in effect.

Your prior research on other professionals—lawyers, insurance agents and home inspectors--will pay off here. The lawyer you choose should represent your best interests and will help you go over the sales contract. You should have the home inspected at this time.

As if the entire mortgage-approval process isn't stressful enough, there are also the logistics of moving that you need to worry about. If you're a renter, now's the time to give your landlord the proper notice that you're moving out. You should contact your utility service providers to determine if you'll need to transfer or terminate your service.

For the move, you may want to hire a professional. You should also research storage costs if you can't move all of your items at once.

Time to get packing! However, at this stage, packing won't be your only concern: you'll be given your closing date when you'll sign the final paperwork. You should also schedule your final walk-through of the house before you sign the papers.

If you're moving that day, be sure you've arranged for your utilities to be ready that day also.

Last but not least, don't leave yourself without options. What if things don't go according to plan? What if, for some reason, you can't move in as planned--do you have money set aside or living arrangements and storage for all your things? The homebuying process is hardly smooth sailing. However, if you follow this timeline and make sure you're organized, you can avoid any squalls that could wind up costing you money, or even your home.