Spring is a popular time to buy a home. More listings hit the market, but competition can be intense. Whether you’re a first-time buyer or looking to upgrade, preparation is the key to a smoother experience.

A little planning now can save you time, stress, and money down the road. Here’s what you need to know before making an offer.

1. Get Pre-approved

A mortgage pre-approval tells sellers you’re serious. It also gives you a clear idea of how much home you can afford. The process involves a lender reviewing your credit, income, and financial history before giving you a pre-approval letter.

A common mistake buyers make is assuming they can afford the full loan amount for which they qualify. Just because a lender approves you for a certain number doesn’t mean that number comfortably fits into your monthly budget. Take a hard look at your income, expenses, and lifestyle before committing to a price range.

Pre-approval also gives you a leg up in competitive markets. Sellers are more likely to accept an offer from a buyer who has already been vetted by a lender.

2. Know Your Budget

Owning a home costs more than the monthly mortgage payment. Property taxes, homeowners insurance, utilities, and maintenance all add to the expense.

If you’re moving from a rental, you may be used to a landlord covering certain costs, like repairs or landscaping. As a homeowner, those costs fall on you.

A general rule of thumb: Your total housing expenses — including your mortgage, property taxes, insurance, and maintenance — shouldn’t exceed 30% of your monthly income. That percentage may vary based on your financial situation, but it’s a good starting point. A mortgage calculator can help you estimate your monthly payments.

3. Save for a Down Payment

The more you put down, the less you’ll owe. A 20% down payment is ideal because it eliminates the need for private mortgage insurance (PMI), but that’s not a requirement. Many buyers qualify for loans with lower down payments. Here are some common loan types to familiarize yourself with:

• Conventional Loans: Typically require at least 5% down, though some programs allow as little as 3%.
• FHA Loans: Require a minimum of 3.5% down and are more accessible for buyers with lower credit scores.
• VA Loans: Available to eligible military service members and veterans with no down payment required.
• USDA Loans: Designed for rural homebuyers, these loans also require no down payment if the home meets eligibility requirements.

Even with a lower down payment, you’ll still need money for closing costs, inspections, and moving expenses. Factor those into your savings plan.

4. Check Your Credit

Check AnnualCreditReport.com for a free copy of your credit report before applying for a mortgage. Search for mistakes, pay off past-due debt, and stay away from adding more credit. Usually, lenders like to see:

• A history of on-time payments
• Low credit card balances relative to your limits
• A mix of credit types, such as credit cards, auto loans, or student loans

You should focus on improving your score months before you plan to search for houses. Minimal modifications in your credit history will significantly affect how much interest you get.

5. Understand Mortgage Options

Not every mortgage is the same. Your monthly payments and the total paid over time will depend on the kind of loan you decide upon.

• Fixed-Rate Mortgages: Your interest rate stays the same for the life of the loan, making it easier to budget.
• Adjustable-Rate Mortgages (ARMs): These loans start with a lower interest rate, but that rate can change after an initial period, leading to potentially higher payments.
• Shorter-Term Loans: A 15-year mortgage has higher monthly payments but saves money on interest compared to a 30-year loan.

Discuss your best financial option with your lender to make the right call. You should select a loan according to your future financial objectives.

6. Factor in Property Taxes and Insurance

Property taxes and homeowners insurance vary by location and can significantly impact your total monthly payment.

Look at property tax records for the home you’re considering and check the tax rates for the area.

Some locations reassess property values every few years, which can increase your bill over time.

Homeowners insurance rates depend on factors like the age of the home, its location, and whether it’s in a flood or tornado-prone area. If the home requires special insurance, like flood or earthquake coverage, those extra costs need to be factored into your budget.

7. Research the Neighborhood

Start by visiting the area at different times of the day and week. What’s quiet on a Sunday afternoon might be gridlocked on a Monday morning. You should also look into school ratings, whether or not you have children — good schools can impact property values.

Check local crime reports and any upcoming developments that might change the neighborhood dynamic. And if the home is in a homeowners association (HOA), review their rules and fees. Some HOAs have strict regulations on home modifications, landscaping, or even parking.

8. Plan for Maintenance Costs

Owning a home means handling repairs and upkeep. A general guideline is to budget at least 1% of the home’s yearly value for maintenance. Therefore, look at big-ticket items like:

• Roof condition and age
• Heating and cooling system lifespan
• Plumbing and electrical systems
• Foundation stability

Setting aside money for repairs can prevent financial stress when unexpected costs arise.

9. Don’t Open New Credit Accounts

Once you’re pre-approved, avoid any major financial changes. Opening new credit cards, financing a car, or making large purchases on credit can change your debt-to-income ratio and affect your mortgage approval.

Lenders recheck your credit before closing. If your financial situation changes, your loan terms — or even your approval — could be at risk. Keep spending stable until the mortgage process is complete.

10. Work with a Local Lender

A big-name bank might seem like the obvious choice, but a local lender can offer personalized service and flexibility. The Harvard State Bank understands the local market and provides customized mortgage solutions that fit your needs.

Community banks can underwrite their own loans, unlike large banks that follow rigid lending structures. That means faster decisions and the ability to tailor loans to your situation.

Ready to Buy? Contact The Harvard State Bank First

At The Harvard State Bank, we provide a complete pathway of support for home purchases. Contact our mortgage team for assistance regarding buying a home during the spring season.

Call us today: (815) 943-4400.