Preparing to finance a home can be a lot of work. It’s gonna cause a lot of thinking and balancing. However, If you follow some simple steps as well as some not so simple steps you will be well on your way to buying a home in no time.
1. Start saving your money.
You need to start saving every penny that you can now. In order to qualify for a mortgage loan, you are going to have to come up with a sizable down payment. 20% of the total purchase cost is ideal. Also, one factor in closing costs is it can run anywhere from 3-7% in addition to the purchase price of the house that you choose to buy.
2. Get your credit in order.
Before checking real estate listings for houses for sale you will want to find out what your credit score is. Make sure you grab a free credit report and go over any errors, bad debt, or late payments. Take time to review this report and try to clean it up before you apply for financing.
3. Don’t bounce around between jobs
Nothing throws up a red flag faster when reviewing loan applications than a person who doesn’t have a stable work history. Many different aspects go into considering granting a loan to a potential client; job stability is one of the biggest factors. Most lenders won’t even look at you without a two-year work history. So if you are considering changing careers, wait until after you have gained financing for buying a house.
4. Reducing your debt will go a long way.
A lender will always check the amount of debt that you are carrying. If it is over 30% of your income it may impact the chances of procuring financing for a house. Before you even consider applying for a loan, reduce the balances of your debt.
5. Budget, budget, budget
Go over your spending habits for the last few months. Include everything: rent, food, utilities, car payment, cell phone, entertainment, EVERYTHING! Then trim the fat, stop eating out and start cooking, go out on dates once a month instead of every weekend, skip the daily gourmet coffee, they really add up. Put all this money towards saving for your down payment instead.
6. Figure out how much you can afford when buying a house.
Knowing how much you can afford is perhaps the biggest battle, as your eyes are always going to be bigger than your wallet. Go online and look for one of the many mortgage calculators so that you can figure out what kind of monthly mortgage payment you can afford to make.
7. Find a real estate agent.
Finding a realtor is perhaps one of the most important steps that you can make. They are the most powerful ally to have on your side when trying to traverse the real estate market. Your realtor will help you scour the real estate listings to find that perfect home. After you have examined the houses for sale and decided which is the one for you, your agent will represent you and your best interests. They will help you negotiate pricing, know when to counter offer, and finish finalizing all the paperwork necessary for you to own a home.
These bits of advice might seem to suck a few simple joys of your life, but the rewards are definitely long-lasting.