Getting Your Finances In Order Is Still The Best Homebuying Advice
If you're looking to buy a home this year, the best thing you can do before you start home shopping is take a long, hard look at your finances. Here's a checklist to get started.
Start saving up funds for a down payment and an emergency fund. The down payment on your new home could range from 3% to 20%, depending upon the loan program you select and the amount you have saved. Any money not used for the down payment can be part of your emergency fund to pay for unexpected expenses (new water heater, broken window, etc.) and have as a cushion should your job situation change.
Pay down debt. Pay off your high-interest-rate credit cards first. Work to retire other debt like student loans, car loans, personal loans, etc. Once debt is under control, your housing budget has more breathing room, giving you more options.
Review your credit reports. Three credit-reporting agencies—Equifax, Experian and TransUnion—collect data on how well you repay your financial obligations and organize the information for lenders to make determinations on how well you'd likely repay your debt. Review these reports for errors and ensure all information is correct before you get preapproved for a mortgage.
Get preapproved for a mortgage. Visit a local lender (contact us for recommendations) and provide documentation on your income, savings and debts to determine how much mortgage you can afford. Then decide if that number is comfortable before you start shopping for homes to buy.
Getting finances in order is your best bet for mortgage approval. Get ready for a new home with a new mortgage!