Plan and Prepare for Your Biggest Investment
Buying a home for the first time can certainly be a daunting task, so working with someone you trust and can always contact is key throughout the process. Working with a trusted, experienced loan officer is the best way to go, but educating yourself on mortgage matters will also help ease the process. Here are some aspects you should consider when getting your finances together to purchase a home.
The more you know, the better off you’ll be. Like a student gearing up for an important exam, you should learn as much as possible about the process that will soon temporarily take over much of your life. Talk to your loan officer and ask for literature and materials to go over to keep yourself up to speed, and do your own research to make sure you know all of the possible issues that can arise throughout the course of obtaining your mortgage. Read books, visit websites, talk to other homeowners, and most importantly, use your loan officer as a constant resource. Not only is it the loan officer’s job to find you the best program and rate, but it’s essential that they also help each client understand the step-by-step process, from approval to closing.
Planning for what you can afford. You want to buy a home, but you’re not sure if your finances are quite up to speed. The first thing to do is speak to your 1st Advantage Loan Officer who will run your credit, see what you can afford and get you pre-approved, this way you can begin shopping in the appropriate price range. And if you’re still in the planning stages, begin putting the amount of money that you’ll use for a mortgage payment into a separate savings account. Save that money rather than spending it for those months, this way you’ll be able to see how well you do at managing your other bills each month after that future mortgage payment is gone. Also, don’t forget to take taxes into account when you’re planning your budget. Other costs that tend to be overlooked as first time home buyers plan their new financing include homeowner’s dues, new utility payments, water and garbage, property insurance, moving, furnishing, and the overall maintenance of the home.
Prepare yourself for a mortgage payment. Six months is a good amount of time to start preparing your finances in anticipation of buying a home, because it takes time to clear up old forgotten debt and have it cycle through to the credit report and score. It’s best to get credit reports from all three bureaus to avoid any surprises, and review them all for inaccuracies, which must then be disputed. This is your chance to get caught up on any payments that you may be behind on or to pay off any old bills you may have forgotten about until seeing your report. Next, check your credit score, making sure you do everything you can to increase that magic number. This is where paying down your debt comes in, aiming for an amount that doesn’t equal more than 30 percent of your line of credit. Having at least three open and active lines of credit that you take care of responsibly is a good amount, and demonstrates that you can handle multiple types of credit responsibly.
For first time home buyers who are looking to make the big move, this is obvious, yet essential advice: save your money, clear up your credit and most importantly, educate yourself and work with someone that you trust. A home is an investment—probably the most important one you’ll ever make. Don’t hesitate to ask questions and learn all there is to know so you can prepare yourself for any upcoming situation with your mortgage and new home. •