Preparing to buy a home begins the moment you make the decision to become a homeowner. It may take weeks, months or years to ready your financial status so that you can sign your first purchase offer. To help ensure your eventual success, here are five steps to follow.
Getting your credit in order should be the first thing you do. Pay off student loans and credit cards. Your credit score will go up, and lenders will look favorably at a lower debt-to-income ratio for qualifying. The better your credit score, the better the rate and terms of your loan.
Start saving as early as possible for a down payment. The higher the percentage of the purchase price that you can put down, the more favorable your loan terms will be. Once you pay off your debts, more money can be allocated towards your down payment.
Perform a personal expense audit so you can pinpoint where you can save. It will also help you budget for your housing expenses once you close. Your new-home budget should include maintenance costs and utilities in addition to the mortgage, taxes and insurance. Having reserves will make it easier to qualify for your loan.
Plan for closing costs when you start setting aside down payment funds. Expect your closing costs to be 3% to 5% of the loan amount.
Please contact me for a personal review of your financial status so I can help you prepare to buy a home. I am always here to help, and I am just a phone call or email away.