Congratulations, you’ve decided to buy a home this year. Homeownership has many rewards including building up equity and having a place to call your own. Whether you’re a first-time buyer or a trade-up buyer, the sooner you start preparing, the better. By following these simple tips, you’ll feel confident and ready to get out there and find the perfect home for you this year.
Determine Your Home Search Criteria
In a hot housing market, you may not get all the home features you want in a new place within your budget. You’ll have to decide on what you’re not willing to compromise. It is crucial to sit down and think through what your needs and wants are. Home features such as square footage or the size of the backyard might be difficult to change. Even seasoned home owners will find it a good use of time to make a list of new home must-have features.
Instead of scrolling through listing after listing, you can narrow down your search significantly by knowing your absolute needs. Prioritizing your list is important but so is keeping an open mind, especially when it comes to the smaller stuff. Most home buyers will have to compromise on at least a couple of items to find a house within their budget.
Check Your Credit Score
Credit requirements have become stricter in recent years, making it challenging for some buyers to find home loans. Having a favorable credit score can make a huge difference in getting approved for a loan. Experts recommend checking your credit report even if you think nothing has changed. You’ll have to make sure you are not being unfairly penalized for old debts, which can sometimes linger on credit reports.
Typically, borrowers with scores in the low 600s and even high 500s can still find lenders who will qualify them, but ideally, you should strive for scores in the mid-to-upper-700s to land the best rate. Also, refrain from opening any new credit cards in the months leading up to your purchase because it could hurt your chances of getting a mortgage considerably.
Decide How Much You Want To Spend
Don’t let your maximum loan approval amount dictate your home buying budget. Honestly examine your finances and determine what you can safely, realistically afford. Experts say your total monthly home expenses should not exceed more than one-third of your gross monthly income. Don’t forget to calculate in your final budget how much you’ll need to cover any loan fees and closing costs.
Sell Your Current Home
If buying a new home is contingent on selling your current one, it’s a good idea to reach out and consult with your realtor. Before listing your home for sale, consider working on any maintenance issues your home may have and plan for when, how, and if each one will be addressed. Ask your realtor if investing in any upgrades to your current home would result in a favorable return when it comes time to sell and get to work. You might be surprised by how much even minor repairs and upgrades can attract potential home buyers.