A new year is just around the corner! 2015 is the perfect year to achieve your goal of owning a home. Because owning a home is such a big financial commitment, you’ll need to make sure that you have a few things in order before making an offer on a home including; savings, income, and good credit. Below are a few tips on how to get your finances together to purchase a home in the New Year!
Build Your Savings
You will need to be able to pay a significant chunk of money to cover the down payment and mortgage closing costs on a house. Although you may be able to qualify for certain financing that requires less down or get down payment assistance, traditional lenders will expect you to put up 20 percent of the cost of the home. You also need an emergency savings fund. You will have more expenses with owning compared to renting and some of those costs can be expensive. Set a starting goal of your income times three months.
Pay Off Debts
You need to also pay down your credit card and other debts along with saving up for a down payment. Mortgage lenders put a limit on the total percentage of debt payments, including your new home mortgage, compared to your income and getting rid of other debt will make it easier to qualify for a home loan. Moving into a new home with little or no debt will also make it easier to cover the expenses of life and home ownership.
Check Your Credit Report
The credit tracking agencies are required by law to provide you with a free credit report once a year, so ask for yours and see what your creditors are reporting about how you pay your bills. You can dispute errors on the report and work to clean up any problems such as late payments by getting and staying current on those accounts. A bank or mortgage lender may help out by going over your credit report and letting you know about any issues that could keep you from qualifying for a mortgage
Research the Market
Researching the market includes finding out how much homes cost in your area and how much you can afford based on your income. A mortgage lender can give you an idea on the size of mortgage you may qualify for and that number lets you check the market to see what kind of home you can afford to buy. Another part of your research is to find out what types of first-time buyer programs you can qualify for and use to help you get into that first house. First-time buyer programs are usually managed by your state or local housing authority.Tweet