Although homeownership is considered by many to be a major component of the American Dream, all too often, we witness many people not being sufficiently prepared and/or ready to prepare, from a financial perspective! When you identify how homeownership might meet your needs and aspirations, and make sure your choice is the best one for you, to make sure the process, from finding a home to closing, is as stress free, as possible! Given that, for most of us, the value of our home represents our single largest financial asset, wouldn’t it make sense to proceed wisely? With that in mind, this article will briefly attempt to consider, examine, review, and discuss 6 steps that could help in the process of preparing for many of the financial considerations involved, from the step of buying a home, to home ownership, one.
1. Do not add more debt/credit: If you really want to own a home, in the lead up to your search/search, make sure you avoid taking on more debt and instead try to pay off all debt. , you currently have. Your overall credit is key in determining whether you qualify for a mortgage and, if you do, whether you’ll qualify for the best possible rate. Evaluate your credit report, correct any errors immediately and address any weaknesses. Do it yourself or hire a professional to better position you in this area!
two. Pay off existing debt: Mortgage lenders/home financiers use various ratios to determine their decisions as to whom to lend funds to! They consider one of these significant factors to be the percentage of one’s total debt to income. To prepare, use the lead up to your quest to pay off this debt!
3. Check credit report: Take your credit and your credit history seriously! Before you begin, obtain a copy of your report and review it carefully for errors, mistakes, or matters that require explanation. Either go through the process yourself, to fix them, or use a professional, to make sure you’re better positioned. Take a look at your FICO score, know what it takes, and work to improve!
Four. Build/accumulate the necessary funds, necessary to Deposit: Although, in most cases, it might require 20% Deposit, To qualify for a mortgage loan, there are, today, certain loans, which require less. However, when you deposit less, you will have to pay more each month and it can be more difficult to qualify! Take the time, between the moment you make the decision, to search and, when you find, the right house, for you and your needs, to save so much money, so that you are ready and prepared!
5. Prepare for contingencies/Reserves from 3 to 6 months: When you buy a house, there are often many unexpected expenses, etc. It is wise to prepare for contingencies and create various financial reserves, including for repairs, renovations, appliance repair, major components, and unforeseen employment interruptions. Three to six months’ worth of money should be reserved for these considerations!
6. Bookings: When you have all the reserves you need, you significantly reduce your potential, stresses and unnecessary tensions!
Congratulations on making the decision to buy a home. Now proceed, wisely!
