Image via Kozzi
It’s a new year – a time to think about what you want to accomplish in the weeks and months ahead. If one of your New Year’s resolutions is to buy a home at some point in 2016, there are a few things you’ll need to do before you look for a house.
Take a look at this list, and get yourself ready to find the home of your dreams this year!
Check your credit. Everyone is entitled to one free report from each of the three major credit bureaus each year. Get yours now, and look for mistakes, errors, or old debt you’ve forgotten about. Start dealing with any issues now so that you’ll qualify for a good interest rate on your mortgage later.
Be realistic about your budget. Ideally, your housing costs shouldn’t exceed 30 percent of your income. This includes mortgage, taxes, insurance, maintenance, and even utilities. If your ideal home is out of your price range, you can do a few things:
- Save more for a larger down payment.
- Adjust your expectations and find something within your budget.
- Wait until your income increases.
Don’t try to buy a home that will leave you house poor and with no extra income for emergencies or even the occasional latte.
Look into assistance programs. Most buyer assistance programs are for first-time homebuyers. If you haven’t owned a home for several years, you may qualify, too. Find out if you qualify and what you need to do before you start shopping. The Escambia County Housing Finance Authority offers assistance in Escambia, Santa Rosa, Okaloosa, and Walton counties.
Take a look at your savings. Even if you qualify for a three or five percent down payment with your mortgage, you’ll need to have enough in savings to cover additional closing costs and still have some left over. Most lenders don’t like to see your entire savings account wiped out when you purchase a home. Keep saving, and don’t stop – even after you’ve moved in.
Talk to a lender before you start looking for a house. Every lender is a little different, and most will be happy to talk to you about the prequalification and preapproval process. Neither is a guarantee of a loan but will give you an idea of the possible interest rate and loan amount you may qualify for. It’s a good idea to shop around to find the best possible rate and mortgage instead of sticking with the first company you find.
In today’s market with lower inventory and high quality homes selling quickly – and receiving multiple offers – it pays to have your finances in order before you even start looking. When you know how much you can afford and what kind of mortgage you may qualify for, you’ll be in a better position to buy the home of your dreams.
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