Life Events Planning Checklist: Buying a Home
To print or save --> Buying a Home Planning Checklist.pdf
☐ Check your credit score before you start shopping.
➢ Personally, I like Credit Karma since it's free.
➢ If your score is less than 670 you need to work to increase it before you apply for a loan.
➢ 670-739 is considered "Good" credit and will get you a better rate.
➢ 740-799 is considered "Very Good" and will usually get you the best rate.
➢ 800-850 is the highest tier, but there are not many lenders that distinguish between "Very Good" and "Excellent" so it may not matter, particularly if your down payment is 20% or more.
☐ Determine how much you can afford to pay each month.
➢ Don't assume you can pay more for housing than you are now unless you are saving the difference easily.
➢ Divide your new monthly mortgage payment (Principal and Interest plus escrow for Taxes and Insurance) by your monthly gross income. Typically, this ratio should not exceed 28%.
➢ Divide your new monthly mortgage payment plus all your monthly debt payments by your gross income per month. Typically, this ratio should not exceed 36%.
☐ Solicit mortgage options and rates.
➢ Get offers from a few lenders. Contact me if you live in Northern VA and want a local independent broker.
☐ Create new projections with updated cash flows to make sure your financial plan is still on track.
➢ Be sure you include ALL the costs:
▪ Principal and Interest
▪ Property Taxes
▪ Homeowner's Insurance
▪ PMI (if you are putting less than 20% down)
▪ Homeowner's Association dues
▪ Closing costs
☐ Take a look at your balance sheet and update with new home purchase.
☐ Review your life insurance. If you are going from renter to owner you may need more coverage.
☐ Review your tax situation with a CPA if there are complexities such as mortgage principal over $750,000.
☐ Does buying a home change your estate plan?
☐ Review all of these items with your financial advisor.
While this check list can serve as a guide, speaking to an independent fiduciary financial planner is the best way to get your financial life in order. Reach out to us today!
All the Best !
Your Best Path Financial Planning