How to Prepare to Buy a Home
If you or someone you know is thinking about buying a home in the next 6-12 months, here are three tips can should begin doing today to prepare:
Debt - if you have debt (revolving debt, auto loan, etc.), pay it down or off as quickly as possible. Pay as much as possible on the highest interest rate debt first. Once that is paid off, roll that same amount of payment into the next highest rate debt. And most importantly, do not incur any new unnecessary debt (that includes financing a new car). It may not be necessary for you to pay off student loans. If you have a student loan, give me a call to discuss.
Credit score - minimum credit scores are 620-640 for most loans, but at those scores you're going to pay 0.25-0.50+% more than if your credit score is above 720 or even 740. Know your credit score, and begin to take steps to improve your score if it is lower than 740. If you would like to discuss ways you can raise your credit score in preparation for buying a home, give me a call.
Down payment - always the largest hurdle for first-time homebuyers. Down payment amounts begin as low as 3%, but typically the lower the down payment the higher your monthly payments. Begin saving as much as possible in a high interest savings account as soon as all debt is paid off.
There are many things to consider if you're preparing to purchase a home. Your first step is always to get your financial house in order and speak with a lender. If you have questions, give me a call. I will walk you through every step to ensure you have a solid plan and we’ll be house hunting before you know it!