Personal Finance

10 Steps to Buy a Home

Written by Rebecca Lake

Buying a home involves jumping through quite a few hoops before you can officially call yourself a homeowner. When it’s your first time venturing into the home-buying arena, it’s easy to get overwhelmed if you’re clueless about where to begin. Breaking the process down step-by-step makes the task a little less daunting.

1. Give yourself a financial check-up

The very first thing you need to do before you start browsing property listings is take a good look at where you’re at financially. Specifically, you should be focusing on those things that the lender’s going to consider when determining whether to approve you for a mortgage.

That includes things like your income, debt and savings. Lenders want to see that you have a steady stream of money coming in, that you’re using some of it to build up a savings cushion, and that your debt payments aren’t eating up too much of your earnings each month.

Lenders are also going to be interested in what your credit looks like. If it’s been awhile since you checked yours, you’ll need to get a copy of your reports from all three of the credit bureaus. Go over them carefully to make sure that all of your accounts are being reported correctly. If you find an error, don’t waste time in disputing it with the reporting agency.

Aside from checking your report, you should also take a peek at your credit score. Your score can give you an idea of how easy it’ll be to get approved and what kind of interest rates you’ll qualify for on a mortgage.

2. Plan your home-buying budget

Once you’ve gone over your financial details you can move on to the second step, which is determining just how much home you can afford. The easiest way to do that is to plug in your income and debt information into an online mortgage calculator, but keep in mind that this is a rough estimate at best and what a lender is willing to offer may be very different.

As a general rule of thumb, you should be spending no more than 36 percent of your income on debt each month, with no more than 28 percent of what you make going towards your housing payment. Dividing your monthly debt payments by your monthly income will give you an idea of whether you’re above or below this threshold.

About the author

Rebecca Lake

Rebecca Lake is a personal finance writer and blogger specializing in topics related to mortgages, retirement and business credit. Her work has appeared in a variety of outlets around the web, including Smart Asset and Money Crashers. You can find her on Twitter at @seemomwrite or her website,


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