Steps to Prepare for Buying a Home

A Bank Five Nine Guide to Mortgage Readiness

Buying a home is one of the most exciting milestones in life, but it can also feel overwhelming. From saving for a down payment to understanding mortgage terms, the process takes careful planning.

At Bank Five Nine, we’re here to make that journey a little easier. Whether you’re just starting to explore or getting serious about pre-approval, these steps will help you prepare with confidence.

1. Know Why You Want to Buy

Homeownership is a big commitment, so it’s important to understand your “why.” Is it long-term stability? Building equity? Having a space of your own? Knowing your goals can help you decide whether now is the right time.

Quick tip: Compare the cost of renting vs. owning using the 5% rule. If annual rent is more than 5% of the home price, buying may be more financially sound.

2. Learn What a Mortgage Really Is

A mortgage is a home loan you typically repay over 15 to 30 years. Your monthly payment generally includes:

Principal: The amount you borrow
Interest: What the lender charges to loan you money
Taxes: Property taxes based on your home’s value
Insurance: Homeowners insurance (and possibly PMI)

PMI (Private Mortgage Insurance) may be required if your down payment is under 20%.

3. Estimate How Much You Can Afford

Use a home affordability calculator to estimate what you can realistically spend. Be sure to factor in:

Monthly income and expenses
Debt-to-income (DTI) ratio
Savings for down payment and closing costs
Emergency fund (don’t wipe it out!)

4. Improve Your Credit Score

Your credit score plays a big role in determining your mortgage rate. Higher score = lower interest = big savings over time.

Ways to boost your score:

Pay down debts
Make all payments on time
Dispute any credit report errors
Limit new credit applications

5. Start Budgeting & Saving

Create a budget that includes monthly savings for your home purchase. Most buyers aim for a 5–20% down payment, plus:

Closing costs (2–5% of home price)
Home inspection & appraisal fees
Moving expenses
Furniture, repairs, or upgrades

Even small steps, like cutting back on subscriptions or eating out less, can add up.

6. Get Pre-Approved for a Mortgage

A pre-approval letter from a trusted lender shows sellers you’re a serious buyer. It also:

Tells you what price range to shop in
Gives you an edge in competitive markets
Helps you lock in rates and terms early

At Bank Five Nine, we walk you through the pre-approval process with personal, local guidance.

7. Talk to a Trusted Financial Partner

You don’t have to do this alone. Sit down with a mortgage advisor or banker who can:

Review your financial readiness
Explain mortgage options
Help you compare rates and terms
Outline next steps

Bank Five Nine offers tools, calculators, and personalized guidance to support your home-buying process.

Additional Resources: Your Home Loan Toolkit

For more comprehensive guidance throughout the home-buying process, we recommend downloading the CFPB Your Home Loan Toolkit. This step-by-step guide provides essential information and tools to help you make informed decisions from pre-approval to closing. It’s a great resource to keep handy as you work toward homeownership.

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Key Takeaways

Understand your homeownership goals and timeline

Learn what goes into a mortgage payment

Save early for a down payment and other expenses

Improve your credit score to unlock better rates

Budget wisely—and get pre-approved to show you’re ready

Ready to Take the First Step?

Let’s chat. Whether you’re six months out or just beginning to explore, our mortgage experts are ready to help you plan your path to homeownership.

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Frequently Asked Questions

˄ What’s the first step in preparing to buy a home?

Start by reviewing your finances and creating a budget. This helps you understand what kind of home you can afford.

˄ How much should I save for a down payment?

Aim for 5–20% of the home’s value. Also budget for closing costs and emergency savings.

˄ Can I buy a house with bad credit?

It’s possible, but you’ll likely pay higher interest rates. Improve your score before applying.

˄ Should I get pre-approved or pre-qualified?

Pre-approval is more serious. It involves a credit check and gives you a more accurate budget.

˄ How do I find the best mortgage for me?

Talk to multiple lenders, compare interest rates, terms, and fees, and ask for guidance from a financial advisor or bank.

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