LITTLE ROCK, Ark. (KTHV) -- Whether you're a first-time homebuyer or an experienced owner, buying a house requires you to be prepared. Here's a six-item checklist of must-do's before you purchase a home from Bankrate.com.
1. Strengthen your credit score. The higher your credit score, the lower your down payment and monthly payments. Below 660 or 680, you're either going to have to pay sizable fees or a higher down payment, and that's pretty much the cutoff score for getting a mortgage, he says. Also, stop applying for new credit a year before you apply for financing.
2. Figure out how much house you can afford. If you're using FHA financing, your home payment can't exceed 31-percent of your monthly income. For conventional loans, a safe formula is that home expenses should not exceed 28-percent of your gross monthly income.
3. Save for a down payment and closing costs. You'll typically need to save enough money to put anywhere from 3.5 percent to 20-percent down. One exception, Veterans Affairs loans don't require a down payment. And keep in mind closing costs can run from $2,300 to $4,000.
4. Get pre-approved for a mortgage. Before the real home shopping begins, you want to get financing in place. Documentation around income and assets is very essential, more so than in the last five years.
5. Buy a house you like. You want a home that will make you happy for the next few years. And depending on how much you put down, and how much you have to shell out to sell and relocate, short-term ownership can be a pretty expensive proposition.