The new year is upon us, it is officially 2018! If you are thinking of making your first home purchase this year, we have some great resolutions you can use to make 2018 your best year yet!
Homebuyers:
- Fix your credit: If you plan to make your home buying dreams come true in 2018, you will need to take care of any credit issues you may have. Your credit score will strongly influence what your mortgage payments and interest rate will be. If you think your score might not be as strong as you'd like reach out to get help before applying for a loan. There are a plethora of services and advisor available to help you get your credit in order prior to applying for a mortgage loan, just search for financial advisors in your area.
- Catch up on any bills or late payments: Doing this will help improve your credit score, also it will help you see how much money you have to really work with every month.
- Do not apply for any new credit or loans: Not only will taking on new debt lower your credit score but it will also add to the bills you have every month making it harder to save for your down payment and closing costs. Wait on that furniture loan until you are soundly in your new home and know your monthly spending will allot for the extra bill every month.
- Lower your balances on any credit card or loan you may have: There's a lot of work that goes into buying home and though it may seem daunting to be trying to save for the out of pocket expenses of buying a home, you also need to be working towards getting your outstanding debt lowered. The lower your balance to credit line ratios is the better it is for your credit score. And as we have already mentioned the better your credit score the better mortgage and interest rate you can get.
- Start saving: Though there are many grants available that will help first time home buyers in accessing funds for a down payment, there are still many costs that come with purchasing a home. The grants for down payments usually only provide about 3-5% of the home purchase price as a down payment, the ideal down payment to avoid having to pay mortgage insurance is about 20%. Saving a bit on the side every month to put toward this will only help lower your monthly costs in the long run. Also, closing costs, moving expenses, a cash reserve for any unexpected repair; there are a lot of costs involved in becoming a homeowner and it is best to start pinching pennies now and save as much as you can.
- Do research: Just like any other big purchase in life you are going to want to do your research. Research the home values in the neighborhoods you are looking. See if the value of the homes are increasing or declining over time. Research the various mortgage lenders available. See what interest rates they offer, what sort of programs they have for first time buyers. Before making the jump into home ownership make sure you are making your decisions smartly and are well informed.
- Lastly gather your documents and get pre-approved: After you have done your research, started to save, and fixed up your credit; it is time to head to the lender of your choosing with all your documents in hand. Most lenders are going to want documents to verify your employment and income. Also they will likely want the last two years of income tax returns, W-2's, bank statements, and pay stubs. The lender then will get your pre-approval for a mortgage loan in order and this will give you a clear pictures for where you stand. The pre-approval will allow you too see just how much home you can buy and what your payments may look like. Once you are pre-approved don't make any changes financially that will alter your credit standing. If your credit or financially standing alters too much you may not get final approval on your loan at the time of closing, so keep working hard on your finances all the way to that finish line!
*article information taken from: Top Resolutions for Homebuyers
