8 Steps to Becoming a Homeowner
A home provides a slice of stability in a sometimes unpredictable world. It also gives you the ability to build equity, receive tax breaks, customize your living space, and potentially generate income by renting it out. But home ownership is not something that happens overnight: It’s a journey, and it helps to have a roadmap.
Assess your financial situation
Are you in a financial position to buy a home? Take a look at your credit score, savings and debt-to-income ratio.
Your credit score should be 620 or higher, although it is possible to secure a mortgage loan with a lower score.
You’ll need enough cash on hand to cover a down payment (3%-20% of purchase price) plus closing costs.
Calculate your debt-to-income ratio by adding up all your bills for one month and then dividing the total by your gross annual income. Ideally, your monthly debt should be less than 36%.
Get preapproved
Getting preapproved for a mortgage will give you a better idea of your purchasing power. Sellers will only take you seriously once you’ve been preapproved, because it shows you’re serious about buying a house and have the funds on deck.
LENDALITY will shop lenders and interest rates to make sure you get the most competitive offers. We’ll walk you through your options and help you navigate the homebuying process with ease.
Once you’ve been preapproved, don’t do anything to impact your credit score, like making a large purchase on credit, opening new lines of credit or buying a new car.
Find your neighborhood
If you don’t already know where you want to buy a home, the next step is to figure out which neighborhood you want to settle in. When making this decision, consider the following factors:
HOME PRICES & VALUE
Can you comfortably afford a house in the area? Are the property values appreciating?
JOB OPPORTUNITIES
Make sure the job market is robust enough to provide opportunities for career growth.
LOCAL LIFESTYLE
Make sure the area has plenty of restaurants, shops, parks, sports, etc. to suit your interests.
SAFETY & WALKABILITY
Check the crime rates in the area and walk the neighborhood at various times to get a feel for the community.
SCHOOL DISTRICT
Know the rating of the schools in your district. Even if you don’t have kids, this will affect the property value.
COMMUTES TO WORK & SCHOOL
Check the commute time at different times of day on Google Maps.
Find a real estate agent
A real estate agent is a must during a home search. You may already know who you plan to work with with. If not, you can trust LENDALITY to connect you with one of our experienced agent-partners. The seller covers the cost of the buyer’s agent, so it won’t cost you anything. Be clear with your agent about what you want in a home and listen to their expert guidance.
Go house hunting
Make a list of what you’re looking for—one column for must-haves and another for nice-to-haves. No one home will check every single box, but as long as all your must-haves are satisfied, the home could be a winner.
Most homes go on the market in the spring; the smallest number are listed in winter. The goal is to hit the sweet spot when there are the most number of homes on the market and prices are as low as they’re gonna get. In Tampa Bay, inventory is usually largest in April.
Make an offer
The market has cooled somewhat since the pandemic-frenzy, but you still may need to act fast when you find a home you want. There may be other offers, so be ready to negotiate—but think twice before waiving the inspection contingency. You don’t want to buy a house with a leaking roof or busted water heater.
Get an inspection and an appraisal
Hire an experienced inspector to thoroughly review the property and make sure the roof, foundation, electrical, HVAC and plumbing are all in good shape. Additional inspections for termites and radon are common in Florida. Any issues that arise provide opportunity for further negotiation.
Next comes the property appraisal, which determines whether the home’s price matches its value. If the appraisal comes back low, you may need to renegotiate the purchase price or make a larger down payment.
Close on your new house
Before closing on the home, you’ll go on a final walk-through with your realtor to make sure everything looks good. From there, all that remains is signing the documents, getting the keys and making your move!
