Purchasing a home for the first time is one of the largest purchases you’ll ever make, requiring preparation and careful planning to ensure your dream home becomes your own. By taking these financial factors into consideration, you can make the purchasing process go as smoothly as possible.
Increase Your Credit Score
Getting your credit score in shape before shopping around will ultimately be the biggest contributing factor in determining the approval of a loan by the bank, and how high your interest rate will be. Continue to make payments on time and pay more than the minimum payment on any loans you do still have.
In the same regard, prevent overdrafts from occurring, which are often red flags to lenders. Those with credit scores below 640 typically have to rely on FHA loans. You can start with these 9 Ways To Improve Your Credit Score.
Stay with Your Current Job
When in the process of applying for a home loan, it can be even more difficult to get approved if you are switching jobs, even if it’s for a higher paying position. Wait until the loan has been approved to begin searching for jobs or moving around in your industry.
Save More Than You’ll Need
Purchasing a new home comes with many extra costs, often overlooked by new homeowners. Tasks like having all of the locks rekeyed, fixing a leak or two, and even transferring utility fees can add up to thousands of extra dollars, making it crucial to have some cushion money saved.
Research Loan Programs
For many people, acquiring a loan can feel like signing your life away. Do your research and find which type of loan is most appropriate for your income and financial situation. If you’re looking at a lot or raw land, ask a hard money loans expert like Ellis Equity for advice. For those who are not anticipating saving a lot for the down payment, FHA loans are more ideal as they require less down.
Calculate New Expenses
When you purchase a new home, it often means utility bills will increase, along with landscaping costs and repairs. Do the math beforehand to ensure you can take on the increase in bills, including property taxes, alarm system services, gutter cleaning, and keeping up with the general maintenance on the home.
Save for Closing Costs
Closing costs vary depending on the type of loan you’re acquiring, which can oftentimes be up to $7,000 or $8,000. This costs does not include buyer transfer taxes, homeowners insurance, filing fees, appraisal and origination fees.
Get Pre-approved
It’s a great idea to have a pre-approval letter in your pocket before you even start house hunting. A pre-approval from a lender will tell you exactly how much you can afford. You will fill out an official mortgage application, get an extensive financial background check with credit rating and from that you’ll find out the specific mortgage amount you’re approved for. With this bad boy in hand while you’re house hunting, you’re in great shape to have your offer accepted ASAP.
If you are diligent in saving and have extra costs covered, you should be in your new place in no time! Once you have all of your financial ducks in a row, start working with a First Team agent. You can find one online or reach out and we’ll connect you with a top producer in your area.
Email us at clientservices@firstteam.com
Call us at 888-870-1142
This guest post was written by Brooke Chaplan, a freelance writer and blogger. She lives and works out of her home in Los Lunas, New Mexico. She loves the outdoors and spends most her time hiking, biking and gardening. For more information contact Brooke via Twitter @BrookeChaplan.
