Preparing to buy a home can be daunting. Credit scores, down payments, and mortgages are all on your mind. Here are a few best practices to help you get ready to make one of the biggest investments of your life.
1. Review Your Credit
Know what your credit score is? If you don’t visit annualcreditreport.com and request your free credit records from all three credit reporting bureaus: The TransUnion, Equifax, and Experian. For a small fee, you can also get your credit score.
First up, check the reports thoroughly for any errors that need correcting and/or any negative records they may contain.
These reports should also indicate what you can do to improve your credit. Remember, the higher your credit score is, the easier it is to qualify for the lowest interest rates available, which in turn make your purchase more affordable.
It is a good practice not to finance anything that may potentially hurt or damage your credit before you buy a home.
2. Become Financially Ready
Become financially ready to purchase a home by planning ahead. Save up for your home down payment of at least 20% of what your expected home budget will be and establish an emergency fund for any unexpected expenses.
Not only will you need cash reserves to buy a home, but you’ll also need to prove to a lender that you can afford housing payments that may be higher than what you’re currently paying in rent.
3. Earn Extra Cash
If you’re low on cash, as most first-time buyers are, consider taking drastic steps to cut spending. Or try out some ways to increase your income, such as selling some of your stuff or taking a part-time job.
4. Home Wishlist
Narrow down what home features matter to you most such as home style, size, and preferred location. Use your wishlist to also decide on lifestyle choices like commute times, public transportation, and any other lifestyle options that are important to you.
Look for homes that align with these lifestyle choices.
5. Start Looking At Neighborhoods
Unless you already know where you want to live, take the time to visit a variety of potential neighborhoods. You’ll want to scout out ‘hoods that meet your needs regarding transportation options and other amenities. Exploring different locations will help you narrow your priorities.
6. Investigate Down Payment Assistance Programs
Visit Down Payment Resources to learn about programs in your area that may help you find down payment money or a low-interest loan.
7. Get PreQualified
With prequalification, You’ll receive a commitment in writing from a lender for an exact loan amount. Not only will this help you save time and heartbreak by giving you piece of mind to what your home budget will look like, you ae able to use it as a negotiation tool with home sellers as it shows you are just a step away from acquiring a loan.
When buying a home, there are best practices you can follow to make the process run smoothly and efficiently. Own the home meant for you.