Tired of renting in St. Louis? Picturing a place to call home is a common dream for most people – why pay someone else's mortgage when you could be investing that money into a place of your own? Taking the leap into home-buying is a big step, and the best thing to do is to determine if you’re financially ready. Here are a few factors to consider before calling an agent:

What is Your Credit Rating?

Your credit score is the first thing a bank will look at when determining whether or not to grant you a mortgage or a loan, so request your credit reports and read through them. Mark inaccuracies if there are any and challenge them with the credit reporting agencies. Any item reported with an incorrect address or spelling of your name can be challenged and removed. And if your credit score is lower than you’d like, there are multiple things you can do to improve it, like paying off small debts and having multiple tradelines that are in good standing.

Know What You Can Afford

It’s a good idea to create some type of budget that you use as a tool to know what you can really afford. Looking at homes that are out of your price range can be a dangerous business. Sure, we all would love the three car garage and swimming pool, but can we actually afford it? Narrow down your must-haves and stick to your budget to ensure that you don’t get in over your head.

Do You Have a Down Payment?

It’s not realistic to be able to pay for a home with all cash or 100% financing, so having a solid down payment is important for many people. You could get a decent loan with a 10% down payment; however, you’ll be stuck paying mortgage insurance. Your best bet is to save until you have a 20% down payment ready to go, as having 20% as a down payment opens up a lot of lending doors.

Be Prepared to Pay for Closing Costs

Aside from your down payment, you may also need to pay for closing costs such as home inspections, loan origination fees, and title fees. There’s a chance you can negotiate into your contract for the seller to pay these costs, but don’t depend on it. It’s important to have the funds available in case the fees end up being your responsibility.

Buying your first home is exciting and terrifying all at the same time. Once you determine you’re ready, find yourself an agent and a lender and go shopping for your new home. We would love to know how you prepared for your first home purchase. Share your experience with us below.