You want to buy a house, but you don’t know where to start. Or maybe you don’t know if you want to buy a house, but you’re curious.

Whatever the reason, buying a home is a big investment—so let’s make sure you’re ready. Here are a few things you should know before you step foot into a potential house.

CREDIT SCORE

Let’s talk finances!

If you plan on buying your home with financing, then you’re going to want to pay attention to your credit. Your credit score is important for getting a loan because it’s seen as a sign of how you spend your money or rather, repay borrowed money. If your credit is low, it can impact the interest rate on your loan, meaning a higher monthly payment.

First, figure out what your credit score currently is. You can do this for free. Many banks provide your FICO score via their online banking app. If you don’t have online banking, you can request a free copy of your credit report from the major credit reporting agencies once a year.

Next, make a goal of trying to raise your score if need be. This is really important because your loan may be for 10 years, it may be for 30 years—either way, that’s a long time to live with a higher payment.

In order to buy your dream home, you have to understand yourself and your spending habits.

BUDGET

Since we’re on the topic of finances, let’s talk habits. Buying a home is likely one of the biggest investments you’ll make in your lifetime. In order to buy your dream home, you have to understand yourself and your spending habits.

Sit down, pull out your receipts, venmo transactions, and online banking and map out where your money goes (rent, student loans, food, transportation, etc.). See how much you cost per month. See what’s left—hopefully there’s something left, right? This is your current budget. This exercise will give you an idea of what you can afford—and maybe even shed light on areas you could do more saving. Each person’s spending habits are different, and only you can decide where the value lies in how you spend your money.

Once you know how you currently spend, rework your budget, if possible, to allow for more saving. There are a lot of extra costs that go into buying a home—sometimes unimaginable ones (more on saving later in this post). Try to be conservative when you make your budget, and most importantly, realistic—make a budget that works for you.

FINDING A LENDER

Now that you’ve worked on your credit, and have your budget figured out, it’s time to talk to the pros. At this point, you should have an idea of how much you can afford per month on a home. Talking with a lender ahead of time (aka before you put down any offers) allows you to understand what type of loan may work for you, and also allows you to get pre-approved for your future loan.

To pre-approve you, a lender will run your credit, take your pay stubs, tax returns, etc. and crunch the numbers to identify how much the bank is willing to lend you for your mortgage. The lender will also tell you the interest rate they can give you over the course of your loan.

Don’t be afraid to shop around! Talk to as many lenders as you can. You want to make sure you get the best rate possible. You would think they would all give you the same rate for the same credentials, but in my experience that is not always the case. However, I would not get all of them to pull your credit, as that will affect your credit score. Once one pulls your score you should be able to tell the others what the score is when trying to identify rates.

Shop around when talking to lenders to ensure you get the best interest rate for your mortgage

SAVING SAVING SAVING

You already knew this, but this deserves its own subheading. Plan to save as much as you can. This might take some time. Remember, buying a home is a marathon, not a sprint! There are extra costs to buying a home than just being able to pay the monthly amount. The lender will break down extra purchase costs you’ll have based on what home price you’re aiming for. Upfront, you will need money for a downpayment and closing costs. Outside of that, you may need funds to furnish your home and emergency money for anything that might happen to the home after you get it. For example, my water heater started leaking a few months after I moved in! More about that in a future post of this series.

selecting a home type

Ok now we’re on to the fun part! Dreaming up your future home…

What do you see?

A condo? A townhome? A single family home? There are pros and cons to each that will really come down to personal preference. For example, paying extra monthly fees to not deal with things like maintaining the exterior of your home vs being fully responsible for any maintenance or repair needed in/outside of your home. Do your research and see what works for you!

Explore as much as you can when looking for your future home & neighborhood

finding your future NEIGHBORHOOD

This is also going to come down to personal preference. You might have an idea of what you’re looking for, but I encourage you to explore as much as you can. Go to neighborhoods at different times of the day and week. See how parking/transportation is. Talk to the neighbors. You can learn a lot from them. Find out about community associations. Try to envision what you would enjoy or not enjoy about living there. Is there a particular architecture that you would like for your home? Do you value homes with yard space or homes near parks? Do you need to be close to work? Do the prices of homes in those neighborhoods suit your budget?

FINDING A REALTOR

After all of this, you are now ready to find a realtor! You can contact different agencies, get recommendations from friends/family, look online, or even go to some open houses to meet realtors. I recommend finding a realtor that is familiar with the city and neighborhoods you’re interested in. Talk to a few realtors and choose who you think would be a good fit.

Alright, that’s it for part 1 of this series! As you start to see houses with your realtor, you will get a stronger idea of your must-haves and no-no’s. Stay tuned for part 2 where we’ll discuss everything leading up to an accepted offer!