Buying a home will most likely be one of the biggest purchases of your life, but it doesn't need to be challenging: follow these do's and don'ts of homebuying for an easy, breezy experience!
1) Save for the down payment: This is possibly as the most significant obstacle to homeownership today. Only a mere 38 percent of Americans could come up with $1,000 if they needed to according to a 2014 Bankrate survey. That means 62 percent of Americans would struggle immensely with placing a down payment on a home. Saving money is by no means easy, especially saving thousands of dollars, so it's a great idea to set up a budget aligned with your personal goals...and stick to it!
2) Improve your credit: Mortgage lenders tend to be cautious when it comes to a borrower's credit. If you can, try to get your credit score up to the 700 level. This will improve your ability to be eligible for as many mortgage programs as possible. One of the most essential elements to a great credit score is on-time, in-full payments. Make yourself reminders to when bills are due so you don't miss a payment and can stay on track with your goals. Use our credit guide to ultimately understand your credit score!
3) Avoid overpaying: Often times, people fall in love with houses because of how beautiful and ginormous they are. This can lead to emotion taking over; and thus, a buyer overpaying for their home. Even if you crunch numbers and get the price lowered some, it is important to avoid spending more money than you set in your budget. Remember, you made your budget for a reason. Stand firm with yourself and keep looking at other properties. Most likely, you will fall in love with another house that is just a beautiful, and even better- within your budget!
1) Don't forget to plan for the costs of homeownership: Pride of ownership, control over your space, and building equity are all huge benefits to buying -- but the perks of ownership aren't free! Make sure you're financially prepared to cover all the costs of owning, budgeting in for principal and interest, mortgage insurance (if applicable), property taxes, homeowners insurance, and unforeseen expenses. If you have questions about what your average costs will be each month, consult with your mortgage banker.
2) Don't make any huge purchases before buying: You might want a new car to go along with your new house. Even if you can afford a new car-- or any expensive item, for that matter -- it is best to wait until after you move in. Taking a huge chunk of money out of our savings, or applying for a car loan, could affect your debt-to-income ratio, which is a figure lenders use to determine whether you're qualified for a mortgage. It is a good idea to hold off on any other large purchases to ensure you're in prime position to receive the mortgage you want and experience a smooth transaction.
Looking for the next steps to take in the homebuying process? Visit our link below to download a copy of our Homebuyer's Guide.