Homebuyer Readiness Checklist

Credit Readiness

• Pull your credit report from all three bureaus at AnnualCreditReport.com
• Verify no errors, unknown accounts, or incorrect late payments
• Dispute any errors before applying (allow 30–60 days for resolution)
• Know your credit score — aim for 620+ for conventional, 580+ for FHA
• Score 740+ gets you the best interest rates and saves thousands over the loan term
• No new credit applications in the 3–6 months before you apply for a mortgage
• Credit utilization below 30% (ideally below 10%) on all revolving accounts

Financial Foundation

• Stable employment history — 2+ years in the same field (lenders verify this)
• No major income gaps in the past 24 months
• Debt-to-income (DTI) ratio under 43% (most lenders prefer under 36%)
• Calculate your DTI: total monthly debt payments ÷ gross monthly income
• Emergency fund of 3–6 months expenses remains intact after closing costs and down payment
• No large undocumented deposits in bank accounts in the past 60–90 days (lenders scrutinize these)

Down Payment Savings

• Know your loan type target and required down payment:

• Down payment funds are fully saved and in a stable account (not invested in stocks)
• Down payment source is documented — gift funds require a letter from the giver
• Investigated first-time homebuyer programs in your state (often down payment assistance is available)
• KCCU pre-qualification obtained — know your maximum loan amount before shopping

Closing Cost Budget

• Budget 2–3% of purchase price for closing costs (separate from down payment)
• On a $250,000 home: roughly $5,000–$7,500 in closing costs
• Asked about seller concessions — in slower markets, sellers sometimes cover part of closing costs
• Reviewed Loan Estimate (LE) from lender — received within 3 business days of application
• Compared the Loan Estimate to the Closing Disclosure before closing day

Ongoing Costs Are Budgeted

• Monthly PITI calculated: Principal + Interest + Taxes + Insurance
• Property taxes verified (ask the listing agent for current annual amount)
• Homeowner's insurance quoted (get 2–3 quotes; averages $1,000–$2,500/year depending on location)
• HOA fees confirmed if applicable
• Maintenance budget built in: 1% of home value per year is a standard rule (1.5–2% for older homes)
• Total housing cost is under 28% of gross monthly income (28/36 rule front-end ratio)

The Homebuying Process

• Get pre-qualified at KCCU before contacting real estate agents or touring homes
• Choose a buyer's agent (buyer's agent is typically paid by the seller — no cost to you)
• Understand the current market in your target location (buyer's vs. seller's market)
• Home inspection budgeted: $300–$600 (non-negotiable — always get one)
• Understood contingencies: inspection, financing, appraisal — don't waive these lightly
• Know your timeline: from offer to close is typically 30–60 days

Post-Closing Checklist

• Update your address with USPS, employer, bank, KCCU, IRS
• Transfer/set up utilities in your name before move-in
• Change locks (standard practice on any home purchase)
• Know where your shutoffs are (water main, electrical panel, gas)
• Start building your home maintenance fund immediately
• Review homeowner's insurance coverage — confirm dwelling coverage matches replacement cost, not purchase price