You might be ready
to buy a home, but are you prepared?
Regardless of whether you are a first-time home buyer or an experienced
owner, it’s good practice to conduct a pre-purchase reality check before
buying a house. Before you jump into the financial commitment of the
purchase, give careful consideration to your financial situation and whether
you are truly prepared to buy.
Here is a six-item checklist of items to check off before buying a home:
Strengthen your credit score.
In general, the higher your credit score, the lower your down payment
and monthly payments, which impact your buying
power.
Get pre-approved for a mortgage.
If you’re truly serious, do your research on rates and have your
financing in place before you walk through the first house to know how
much you can afford, and to make a stronger offer.
Have your financial house in
order. Beyond what your credit looks like, don’t change jobs,
change banks, buy a vehicle or any big-ticket items. Avoid inquiries into your credit, don’t be late on payments and don’t
charge excessively.
Save for a down payment and
closing costs. The national average for down payments nationwide is 16
percent, according to LendingTree. Also know the average closing costs in your area.
Build a healthy emergency
fund. Have several months worth of mortgage payments set aside, so lenders can see you’re
not check-to-check, making you a better loan candidate. Plus, repair
issues and home emergencies always come up.
Control your debt and know
how much you can afford. Gain control of the debt you already have,
starting with high-interest debt. Know how much payments you can afford,
with a safe formula that expenses should not exceed 28-31 percent of your
gross monthly income.
