How To Schedule Your First Home Purchase

Q: My question is about timing. My wife and I are looking to buy our first house sometime this year.
 

Our apartment lease is up in October. Ideally, we would like to close in September or October. Our complex does allow month to month leases at a slightly increased rental rate. However we cannot get out of our existing lease until it ends.

When should we hire a broker? Should we be pre-approved or pre-qualified for a mortgage before we hire a broker?

A: Your question about timing is one of the biggest issues first-time buyers face. It's hard to know how long it will take you to find a place to live, get your financing in order, and then close and move.

The best way to figure out timing is to go backwards from your optimal closing date, which I'm assuming is October 31st, or the day your lease ends.

From the date you and the seller agree on a purchase price, it will typically take approximately 6 to 8 weeks to close on the property. That will take you to the end of August.

It's March and August is five months away. While that sounds like a lot of time, it's going to take some time for you to get organized and think about what you want to buy.

What you should do in the next month or two is make sure your wife's and you credit history and score are in order. You can find out your credit history and score for $14.95 at the MyFico.com website.

Next, get pre-approved for your mortgage. Preapproval means you have applied for your mortgage and your application has been approved. The lender commits in writing to funding your loan provided the home you eventually choose appraises out in value.

Once you have that written commitment, you can make an offer to purchase the property knowing that the financing is in place. You also know exactly how much you can spend.

Do you know where you want to live? You should spend the next month or two trying to figure out which neighborhoods appeal to you. Drive around and look at the housing stock, neighborhood stores, and transportation options, commute time to your office, house of worship, family and friends. You'll also want to investigate the local school system, recreational options, local library and community centers, preschools (if you have children), and local crime statistics.

Sometime in April or May, you will want to interview a number of agents to find one you like. Try to find someone who has plenty of experience selling to first-time buyers in your price range who works regularly in your neighborhood of choice.

It may take you a week to find the house of your dreams, or it may take a couple of months. Either way, you'll be right on track to close in September or October.

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