30 Aug Tips on finances for first-time homebuyers
The home buying process can be exciting and very stressful at the same time. You know, you are preparing to make perhaps the biggest investment of your life and you want to make sure you get the house of your dreams that you work so hard for. What many of us don’t realize is that before you actually decide to begin the “house quest”, there are a few tips – financial tips – to consider.
The truth is you need to begin this process a few months or even a few years – depending on where you live – before you can actually decide to purchase a property.
First tip: have you saved enough money for the first down payment? Again, depending on where you live, this process can be lengthy. In order to save this amount, you need to have a clear idea of your spending habits: where are you spending a big portion of your income? Are you paying rent? Do you have any debts? You should have the discipline to budget in order to know where every scent is spent. This way, you can change your budget to determine where you can save. Thus the reason for telling our clients to revisit the budget on a monthly basis.
If you have the discipline to keep a budget, you might be a good idea to set up a monthly automatic transfer of money into a savings account to help you put money aside for a downpayment. It also gets you in the mindset of putting money aside for mortgage payments.
Another tip: keep a credit history. Don’t get yourself into debt, but build a credit – and keep up-to-date with your credit score. This is extremely important to get pre-approved for a mortgage once you decide to buy a home. If your credit score is above 680 (for more on credit scores, click here), your brokers will have flexibility in the mortgage rate offerings. Try to keep your credit card balance low. If it is too high, it’s a red flag for lenders who might thing you overspend and will not be able to keep up with mortgage payments.
Above all, go through different scenarios before you decide to start looking for a home. Contact us to get pre-approved.