You’ve been putting this off for a while. You’re not ready to buy a house or rent an apartment, but you know that it’s time to start looking. You might be thinking, “I’m not ready yet.” You must understand the importance of being prepared before your home search begins. This article will discuss four steps that can help prepare you for your future home by ensuring that you are pre-approved, educated, and ready to start your home search when the time is right.
Take a look at your credit.
The first step to prepare for your home search is by taking a look at your credit. Do you know what the FICO score means? If not, then it’s time to do some research and find out more about this vital number before going into starting your home search. Your loan officer can help you pull a mortgage credit report, which can be different than what you get online or from your credit card companies.
This information should give you an idea of anything else that needs to be addressed so that you’re ready when the right opportunity comes along; you’re ready!
Build a financial plan
The next step to prepare for your home search is by building a financial plan. You and your loan officer will address your ideal:
- Monthly payment
- Loan amount
- Debt to income ratio
- Closing costs
- Discount points (if you are paying any)
- Purchase price
- Loan term
This financial plan will allow you to make any adjustments if you aren’t quite there yet.
Save for a down payment/closing costs.
Once you have a financial plan, it will be time to start saving money for your down payment. You will need to save enough for your down payment and closing costs. The closing costs are the actual fees of the transaction and will be paid by you as the borrower. Your loan officer will guide you on these numbers as they change depending on your loan amount and the company you use.
Build up an emergency fund
The next step is crucial: building and maintaining an emergency fund! This will cover any unexpected costs like medical bills or car troubles that may come up during the loan process but have nothing to do with purchasing a home. You may even need this to make minor repairs to the home, such as paint, appliances, or renovations.
While your down payment money will stay in your account until closing day, you must have reserves for other items. If you were to spend your down payment, you might no longer qualify for the mortgage. However, you will still be contractually obligated to buy the home. This leaves you in a spot that could not only leave you homeless but also in breach of contract. So before making any large purchases, consider speaking with your loan officer first.
It’s essential to look at your credit and create a financial plan that includes saving for costs, preparing an emergency fund, and building up your savings account. This will help you be more financially during the mortgage process. Click here or call us today if you want to schedule a meeting with one of our home loan experts.