Step 1 Home Buying 101: Get Your Financial House in Order
- Alex Watson, Realtor
- Apr 7
- 3 min read
Updated: Apr 7
Step 1 in Our First-Time Buyer Blog Series
Are you dreaming of becoming a homeowner? For many first-time buyers, the path to getting those keys starts well before you ever step foot inside a home. The journey begins by getting your financial house in order and trust me, it makes all the difference when you're ready to request a pre-approval.
This is one of the most exciting milestones in life, and my mission is to make sure you feel informed, confident, and ready for each step along the way.
In this Home Buying 101 series, we’ll break down the entire home buying journey into manageable steps—starting with one of the most important and most overlooked: Getting your financial house in order.
Think of pre-approval like a financial snapshot. It gives you, your trusted Realtor®, and your lender a clear view of your current standing. You will have a clear understanding on what you can afford, what your options are, and where there’s room to grow. But before you request that pre-approval, there are a few things you’ll want to have squared away.
✅ 1. Budget, Credit,& Discipline
Getting pre-approval means your lender is going to take a deep dive into your finances. Get a head start by:
Creating a monthly budget and sticking to it.
Improving your credit score by paying bills on time and reducing any balances on your credit cards.
Keeping credit utilization below 30% — high balances can signal high risk.
Avoid applying for new credit or loans if you don’t absolutely need them unless you are obtaining a secure credit card to help improve your postive scores.
These small moves show lenders you're serious and financially stable.
✅ 2. Maintain a Steady Income
Lenders want to see at least two years of consistent income in the same field or industry. If you’re self-employed, be prepared to provide tax returns and bank statements to show steady cash flow.
✅ 3. Tackle Debt Strategically
A high amount of debt can hurt your buying power. Work on:
Paying down existing loans like auto, personal, or student debt.
Keeping your Debt-to-Income (DTI) ratio under 40%—the lower, the better.
This helps position you as a stronger, less risky borrower.
✅ 4. Stay Current on Taxes
Make sure you’re up to date on all taxes owed to the IRS. Unresolved tax issues can complicate or even derail your mortgage application process.
✅ 5. Build the Habit of Paying a Mortgage
Want to know what your monthly mortgage might feel like? Start setting aside your estimated monthly payment now. This habit:
Prepares you mentally and financially.
Helps build extra savings.
Shows you where adjustments might be needed in your budget.
✅ 6. Save, Save, Save
You’ll need funds for:
Down Payment - typically 0-20% depending on the loan program.
Home Inspection - Typically range $400-$800 and are useful to get a full assessment of the current condition of the home.
Cash to Close, which includes closing costs and any prepaid items like home insurance and taxes.
The more you have saved, the more confident and competitive you can be when the time comes to make an offer.
📆 Ready to Take Action?
The best part? You don’t have to figure it all out alone. Whether you're just starting to explore the idea of homeownership or you're ready to hit the ground running, I'm here to help guide you every step of the way.
👉 Schedule a FREE Buyer or Seller Consultation Today
Let's sit down, make a plan, and get you one step closer to your dream of owning a home.
💬 Have questions about pre-approval or want tips tailored to your situation?
Drop them in the comments or text me anytime at 254-307-1596
Getting a your financial house in order is important part of your journey to making your homeownership dreams a reality. Let’s get started. Reach out now to Alex Watson, your trusted Realtor®, at 254-307-1596 or connect with me on social media @WatsonInvestRealtor. Let's get you into your dream home!
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