What to do before beginning your search
Buying a home is a big decision, and there are lots of small decisions to make along the way to homeownership. To help you navigate the process, we've gathered suggestions on steps to take that can help get the most out of the experience, increasing your confidence while minimizing any confusion.
1. How much can you comfortably afford?
There are more expenses involved with buying and owning a home than just the down payment and monthly mortgage payment. Closing costs, homeowner's insurance, home owner's association fees (if applicable), utilities, and ongoing maintenance are a few items you should consider in addition to your monthly mortgage payment. Use our Home Loan Guide to see what mortgage payment might comfortably fit into your budget. Make sure you'll still be able to afford your other debts and expenses, such as student loans, child care costs, utilities, and car payments. And keep in mind that you should have an "emergency fund" on hand to prepare for any unexpected changes in your income (like reduction in your wages) or unexpected expenses (like medical bills or house repairs).
2. What are you looking for in a home?
Create a list of what you need and what you want in a home to share with a real estate professional, and to refer to as you look at homes. Have an honest discussion about how your wishes fit within your budget, keeping in mind that you will need to set aside money to cover closing costs, and possibly moving costs. Use our Homebuying wish list to guide the conversation with your real estate professional. You can then use this same wish list to objectively evaluate the homes you've seen while you're house hunting. When you create your wish list, keep in mind that the most important feature in any home is how well it fits your budget.
3. What is your credit score?
As soon as you decide to start looking for a home, check your credit report and credit score with any of the three major credit reporting agencies: Experian, TransUnion and Equifax. If you find any mistakes that need to be corrected, addressing these issues early will put you in a better position when it's time to get a mortgage. Learn more about how your credit score can affect the interest rate on your mortgage.
4. Why should I prequalify?
Knowing what you can comfortably borrow will let you keep your search focused on the homes that are right for both your lifestyle and your budget. Get prequalified so you'll have an estimate of how much you can comfortably afford before you start looking at homes. Talk to a mortgage loan officer to prequalify and get an estimate of what you might be able to borrow.1
5. What is my next step?
Once you have set your budget, created your wish list and found your lender, it's time to find a real estate professional to share all this information with. Start by asking your friends and family if they can recommend a real estate professional they trust. You can also ask your mortgage loan officer for recommendations or find preferred brokers on the Bank of America website.
Once you have found a home that fits your personal preferences, your needs, your budget, and the seller has accepted your offer, it's time to apply for your mortgage. Find out more about applying for your loan, including the documentation needed and details on locking in your interest rate.
What's next? Understanding your home loan options
1Prequalification is neither preapproval nor a commitment to lend; you must submit additional information for review and approval.