Are you excited at the idea of buying a house but overwhelmed trying to figure out where to start? The process can seem like a lot to handle for home buyers until you break it down into smaller and more manageable tasks.
If you are ready to get started, here are 5 action items to help get home buyers on your way to homeownership.
- Look at your credit
Your credit worthiness is a big factor in determining if your lender will approve you for a mortgage or not. There are a few things that home buyers want to look at here. The first is your credit score. The higher your score is, the better your chance of getting approved for a loan and a good interest rate. The most favorable loans and terms are for reserved for home buyers with scores that are 740 or higher.
The second thing that home buyers need to look at is what is included on your credit report. There could be errors that are on your report that are pulling your credit score down. Home buyers will want to take the time to verify what the information is showing, correct any errors, and work on improving anything that is lowering your score, like late payments and large amount of credit.
- Spend less and save more
When you are getting ready to buy a house you will need a down payment. In addition, there are many other expenses involved in the process, not to mention the additional cost of owning a home.
If you wait until you are ready to purchase a house to start saving, it is going to be too late. Start saving early and look for ways to reduce your monthly expenses so you can put additional money aside.
- Consider bringing in more money
Taking on a part-time job or starting a side hustle can be a good way to earn some additional income to put towards your housing expenses. Look for something that you enjoy so it doesn’t feel like a drag adding it in with your regular work schedule.
- Find a lender
There are a few things home buyers want to look for when choosing a lender. The first is finding an experienced lender that offers the type of loan program that will be the best fit for you.
You also want to look at what rates are being offered. Make sure that you compare the APR instead of the interest rate so you know the actual overall cost of the loan.
- Think about your budget
Before you find out how much a lender tells you that you can spend, home buyers need to know how much you can actually afford to spend. Lenders don’t take into consideration the extra spending that you do when they talk to you about how much they can approve you for. That’s your job to determine.
Look at your monthly expenses, including the money you like to spend on items like shopping and going out to eat. Then think about how much you can afford for your mortgage, insurance, and taxes, along with having extra money to save up for the maintenance expenses that will pop up throughout the years.
As with most things, the more prepared home buyers are, the more successful they will. Get to work early on boosting your credit and putting together a savings plan. Once you know what you can afford, get busy finding the right house!