Prepare for Homeownership This Winter

Is one of your New Year resolutions to become a homeowner?

If you’re about to begin the homebuying process, winter can be the perfect season to prepare so you’re ready when the homebuying season warms up with the outdoor temperature.

As the days are short and the nights are cold, there is plenty to do this winter while staying warm indoors. Even if you’re just entertaining the thought of purchasing a house, these are great steps to take to strengthen your financial health.

Don’t spend snow days daydreaming of warmer weather. Use them to get to work preparing for homeownership!

Check and Strengthen Your Credit Score

It is important to know what your credit score is, as lenders use it to determine your eligibility—and you’ll especially want to know after to Big Spend that was the holiday season!

You are allowed one free federally mandated credit report per year (Thanks, Obama), which you can receive through annualcreditreport.com. There, you can review all the items that factor into your credit score. If there are mistakes, correct them; if there’s derogatory information, set to work improving your credit habits.

If you’re interested in getting your FICO score, the most common credit score, there will be a fee around $40 to receive it from FICO’s website, myfico.com.

There are also a number of free ways to access a credit score:

  • Many credit card companies, such as American Express, Discover, or Capital One, offer you a free credit score as a perk
  • NerdWallet grants you a peek of your TransUnion VantageScore® 3.0 credit score every seven days when you create an obligation free account
  • Mint, a budgeting app, gives you a free Equifax® credit score when you create an account with them. Plus, Mint is one of our all-time favorite apps for taking control of your finances!

We suggest steering clear of Credit Karma or other similar websites – they are just estimates and usually are higher than your FICO score.

If you’re curious about the difference between your FICO credit score and the free ones, check out this blog post.

If after the holidays you have found you’ve been late on payments and it has affected your credit score, don’t panic. Get current on your payments as soon as possible and stay current.

Budget and Save

While this may seem silly or more like common sense, physically writing down and creating a budget for yourself can be extremely helpful.

Make a list or an Excel spreadsheet of your monthly expenses to see what you’re really spending, and what areas you might be able to cut back on to begin saving.

Set up an automatic transfer each payday so a certain amount of your paycheck goes straight to your savings. This way, even if homeownership currently seems out of your budget, you may soon find yourself in closer range over time.

Budgeting is an important first step in the homebuyer process because it will help you understand where you need to go financially and lay down the track you need to take in purchasing your dream home.

Download our free budget spreadsheet to get started!

Take Homebuyer Education and Financial Counseling

While it may be hard to leave the comfort of your home during a cold spell, try getting out for a Saturday or a couple of evenings and take Homebuyer Education.

Homebuyer Education will teach you everything that you need to know about preparing to buy a home, with guest speakers that range from realtors to bankers to home inspectors, so that you can know exactly what to expect and how to get the best deal on all the expenses that go into buying a home.

NeighborWorks of Western Vermont offers Homebuyer Education classes every month, and helps to give you access to Down Payment Assistance programss, closing cost assistance, and free financial coaching with our Home Purchase Advisor!

We have classes every month. Visit our Homebuyer Education page to learn more and sign up!

Get Your Documents in Line

As you’ll learn during Homebuyer Education, there are many documents that you will need going forward. Spend one of your snow days in getting all these documents in order—or figuring out what you don’t have, and how to get it.

The most common documents that you will need for a lender include:

  • Your past tax returns (at least two years’ worth)
  • Proof of current income
  • Thirty days of recent pay stubs
  • Bank statements (about two months’ worth)
  • Your past two years’ of W-2 forms
  • Copies of your photo ID and social security card

Depending upon your situation, you may need other paperwork on life events such as if you’ve gone through a divorce or experienced bankruptcy.

Since the days are shorter during the winter, there’s plenty of time during these extended chilly evenings to sort through all the paperwork without missing out on any daylight hours!

Start Shopping for a Home

While the snow is falling and taking a walk around town is the last thing you want to do, try checking out available houses online.

Websites like Zillow or Realtor.com are good places to start looking for the right home for you. Our Realtors prefer Realtor.com because it usually has more accurate information, but Zillow has some fun features like an affordability calculator.

If the roads aren’t too icy, you can head out for a weekend drive-by of all your favorite houses that you discovered online.

Another option is to get in touch with a realtor to help you find homes that fit your needs and your budget. Here at NeighborWorks of Western Vermont, we have two in-house Realtors that can help you find that perfect home this winter!

As a non-profit, our Realtors want to help you find your dream home (they’re not pushing for the highest commission). Send them an email or give them a call, even if it’s just to ask some basic questions.

Any of these steps would be a step in the right direction, so don’t think that there’s nothing you can do during the winter to prepare for buying a home. And be sure to check out our website to see how we can help you get ready for homeownership!

Author: Jillian Branchaud, Community Engagement AmeriCorps Member