Prepare Your Finances for Becoming a Home Owner
The time has come. You’ve decided you’re ready to settle down in a specific area, and to make that commitment official, you want to buy a house!
Before you start spending all your free time house hunting and dreaming of being a home owner, take a moment to get your finances in order.
Find out your credit score. The Fair Credit Reporting Act (FCRA) requires that each credit bureau provide you with a copy of your credit report once every 12 months. Read over your reports and make sure everything is accurate. Unfortunately, errors on reports are common. If something is being reported incorrectly, you want to deal with it before it causes you to lose out on that amazing house.
Decide your payment range. There are many loan calculators online that can help you determine what a payment would be, but take heed when using them. Many don’t take into account the property tax or homeowners insurance that will be a part of your monthly mortgage payment. Make sure you’re taking the big picture into account.
Get pre-approved. Not only will the pre-approval letter will give you greater negotiating power when you reach the point of making an offer on a house, your pre-approval letter will help you determine what you really can afford. A lender will be able to go over different types of loans with you, help you hammer down a monthly payment, keep an eye on your debt-to-income ratio, and ultimately determine your home buying budget.
Start saving. Being a home owner is wonderful – but there are always things that come up. From regular maintenance to major repairs, many homeowners find themselves surprised and unprepared later on. Getting a home inspection will help prevent some of those unknowns from popping up immediately, but you should still be prepared for things to happen as time goes by. Give yourself a head start by bolstering your savings before you even move in!