9 things to do before making an offer on a house

Before making a house offer, it’s important to secure your down payment, get pre-approved for a mortgage and budget for all housing expenses. Researching comparable sales, getting a home inspection and evaluating your long-term plans ensures your offer is informed and financially sound.

Buying your first home is likely the biggest financial commitment of your life, so making a wise offer is essential. These nine steps give you the clarity and confidence you need to make your move.

1. Have your cash ready

One of the first steps in making an offer is ensuring you have the cash on hand. That could mean selling investments or consolidating savings from multiple accounts to have the cash you need for your down payment and closing costs. This is important to do before moving on to the next step.

Remember, you don't necessarily need to put 20% down. You'll also want to set some cash aside for an emergency fund.

2. Get prequalified or preapproved for a mortgage

Assuming you don't have enough saved up to buy your first home outright in cash, work with your lender to get prequalified and/or preapproved for a mortgage. That way, the seller and your real estate agent know your offer is legitimate.

3. Do some (more) research

You've probably done extensive research up to this point, but you'll want to make sure you've covered all the bases before making a big decision.

Here's what to research before you make an offer:

• Neighborhood
• Comparable sales
• Home's history
• Number of days on the market
• Utilities estimate
• Property taxes
• Schools in the area

You may be able to get some information, such as the utilities estimate, from the seller.

4. Run the expenses through your budget

Your lender will let you know how much mortgage you may prequalify for, but that doesn't mean you should offer that amount on a home. Only you know how much you can and can't afford, and that involves creating a budget.

Calculate what your monthly mortgage payment, taxes, insurance, utilities and homeowners association (HOA) fees would be. Can you afford that much each month in addition to your other expenses and savings targets?

This exercise will help you set a maximum budget for any and all offers. That way, you don't get caught up in the heat of the moment and outbid someone for a house, only to stress over how to afford it. In general, experts recommend spending no more than 28% of your gross monthly income on your monthly mortgage payment.

5. Take another walk through the house

By now, you've toured the house at least once. Take another pass through it, this time with a fine-toothed comb. You may have missed things the first time around in your excitement. Is there any part of the home that needs renovating? What's the condition of the house's exterior?

The first time, you were deciding if you liked the house. The second time, you're deciding if you like it enough to invest hundreds of thousands of dollars in it.

6. Get a home inspection

The home inspection, a must when considering buying a property, will indicate whether any expensive repairs are needed. If something comes up, you could renegotiate the offer or ask the seller to fix any issues before you buy.

For example, if the home inspection determines the roof needs repair, you could either ask the seller to fix it before you buy or incorporate the cost of the repair into a renegotiated offer.

7. Talk to the neighbors

Remember that you're not just buying a home but choosing a new location to live in for the foreseeable future. That means interacting with neighbors and living in a community.

Do the neighbors seem welcoming? What do they think of the neighborhood? Are there frequent power outages that require a generator?

See what information you can glean from neighbors and the community as a whole before making an offer.

8. Evaluate the commute to work

Check out your current commute from the new house, but also consider potential future jobs you may have over the next several years. How close is this house to other employment opportunities?

Also, how accessible is it to public transportation, and how will that impact your current or future jobs?

9. Look to the future

Would this be your "forever home?" If so, there may come a day when you need to expand the home to accommodate your growing family.

For example, you might need to help an aging parent by converting the basement or attic into a separate living space for them. Decide if this home already has that room for expansion or if you'd need to move again.

Take the next step toward your new home

While buying a home is exciting, navigating the process can be stressful. Completing these nine preparatory steps ensures your offer aligns with your financial goals.

Ready to take the next step? Contact a Citizens loan officer today to get prequalified for a mortgage.