6 Things to Do Before Buying a Home
Buying a house is, for some people, the biggest financial endeavor they’ll ever take on. It’s a lot of money being moved around, and often, there’s a lot of lending and borrowing involved to make the transaction happen, which means it’s something that’s going to hang around for a while in your life. If this will be the first time that you buy a home, then that’s an even bigger deal. There’s a lot of mistakes you can make along the way, but if you’re serious about the process and know exactly what you’re able to take on, then you should be fine, but there are things you can do before even getting into the process to make sure that you get the best deal possible.
Figure Out What You Want
Before you even start looking for the home, you should figure out what it is that you want. You can look at styles, and look in catalogues to help you out, but you’ll want to figure out the things that are necessities to a home, and what are deal-breakers, without settling on one home that you may not even get. You don’t want to do this by finding single homes to replicate in your search, you want to pick attributes. This will narrow down your searching and make the goals more realistic.
You also want to figure out the price range. How expensive do you want, or how expensive do you think you can go? That will be confirmed later in the process, but it’s something you always want to be thinking about before it’s even confirmed by a professional, so that you’re not getting in over your head or disappointed down the road.
Build Up a Good Credit Score
Healthy credit is extremely important to home-buying. If you have a good credit score, then the interest rates you can work with will be that much better. Your credit score is the direct determination of how good you are at paying back any debts, so there are interest rates that will be tacked onto the bracket your score falls in. There are tons of ways to build your credit if it isn’t great though. Opening a new credit card and keeping up to date with purchases, or getting a car loan. The best way to build credit is by using credit and using it as smartly as possible. If you never miss a payment, and aren’t getting your score checked constantly. Then you’ll probably have an easy time with your interest rate.
Save Up Some Money
For the down payment and closing costs, that’s where you’re going to be paying the most money out of pocket. You’ll want to save up as much as you can, so you can put the biggest down payment on it, because that’ll make paying off the mortgage easier down the road. If this isn’t your first property, and you’re the owner of a mortgage note, meaning that you are the person that someone else is paying a mortgage to, then you might be able to sell that note and get the money you need. Places like American Equity Funding will buy your note for a cost that makes them the owner of the mortgage, and you get to walk away with a lump sum.
Get Pre-Approved for a Mortgage
You’ll also want to get pre-approved by a bank because they’ll be the ones who tell you what your savings, credit score, and income all translate to for your financing. All the guesswork will be gone, and you’ll know the exact financial situation you’re in. They’ll give you the interest rates that you’ll have, and you’ll be able to figure out a price range from there. Once you’re pre-approved, all the doors are open.
Find the Home of your Dreams
Once you have the price range, then it’ll be easy to find the house. You can start looking finally and you don’t have to rush. You can even save more money while looking and make yourself even more comfortable in the eventually agreed upon mortgage.
Plan for Payback
Once you find the house and everything is settled, the work isn’t done. You’re going to be working on this transaction for a while by making sure you can pay it back, so plan. Figure out your budget, and budget some extra money for emergencies in case something comes up that could affect your payment schedule. You don’t want to get behind, and if you plan at the outset, and leave the most room, then you’ll be golden.