Buying a home is an exciting time for the whole family. However, the process of financing can be stressful at times. To help you be prepared, we’ve compiled a few tips to keep in mind while preparing to purchase your future home.
Build your credit
Your credit is one of the most important things that a lender will look at. When you’re preparing to purchase a home, make sure you’re handling your current debt responsibly. You can check your credit score on credit bureau websites to see where you stand and if you need to improve your credit score.
Build up your savings account
It’s definitely not wise to drain your savings account to fund a down payment or closing costs that a lender may require. This will leave nothing to help you with any financial emergencies. Keeping 3 to 6 months of living expenses in your savings is best so that you are always prepared. This will also help to relieve some of the stress that would arise if something were to cause your monthly income to decrease.
Consult a financial professional
Buying a home is one of the biggest decisions you will make, so it definitely helps to have some assistance from a qualified financial professional to help you make sure you can afford a new home.
Shop for lenders
The process of homebuying includes more than just shopping for a favorable interest rate. You need to find the best lender for you who will help you through the financing process. It is important to get estimates of loan fees and terms from different lenders before you make a decision and choose a lender. When searching for a lender, consider making a pros and cons list to help you determine which lender is best for you.
Look for preapproval
Before you take the dive into hunting for your home, see if your lender of choice offers the opportunity for preapproval. This is a process used to determine how much you may be able to qualify to borrow for a home purchase. Getting preapproved with a lender can help you have a realistic budget in mind when searching for a home.
Don’t forget your budget
Remember that your monthly mortgage payment won’t be the only expense you have as a homeowner. You also have homeowners’ insurance, property taxes, maintenance costs and utilities, and other living expenses to consider, so be sure to carefully outline your budget and stick with it. Take into consideration any other monthly payments you may have such as car payments, credit cards, gas and groceries. An affordability calculator can help you determine a realistic home loan amount to help you stick to your budget.