The thought of finally having your own home and not having to worry about throwing your money away on rent each month can be very exciting. Of course, before you get too enamored with the idea of becoming a homeowner, you need to temper that excitement with rational thinking. The following dos and don’ts can help buyers such as you save some money and be happier in the long run.
Credit Check-Up: Even before you start your search for your home in earnest, you need to check your own credit and pull if from the three credit bureaus. You can get the information free of charge, and it won’t damage your credit. Rather than just looking at the credit score, you need to check and see if there are any mistakes. You will also want to know check for bankruptcies, tax liens, and judgments. If you notice any problems on your report, challenge them and make sure that the corrections show up on all three bureau reports. If you have questions about items on your credit report ask us for help as we have years of experience dealing with these sort of issues.
Pre-Qualify: Once you know that your credit is in order, you need to know how much house you are able to afford, and this means contacting a mortgage company to get pre-qualified. Just because you might be able to get a loan for a large sum of money doesn’t always mean that you are going to be able to afford the home. You need to make sure that you will still be able to have enough money left over after paying the mortgage each month so you can pay all of your other bills and still live comfortably.
Be realistic: When choosing your home, make sure that you are living within your means. You might not need to have a house as big as the one that you’ve been looking at. It might be a better move financially to choose a smaller home that fits your current needs. It will almost certainly be closer to your budget as well. When choosing a home, consider the location in regards to schools and your commute.
There are a long list of “don’ts” when it comes to buying a home, but these are 2 of the most common ones we see:
Take on new debt: Don’t buy anything large right before you buy a house unless you are paying in cash. If you buy a car and have a large car loan, it can make getting a loan for a home more difficult.
Quit your job: While many people dream of owning their own business, wait until AFTER you buy a home to do so if you are in the market. If you are newly self-employed, you may have to wait a few years before trying to get a mortgage loan. During those first couple years of self-employment, it can be difficult to qualify for a home loan.