As anyone who has been through the process will tell you, buying a home can be a challenging experience. As such, you need to be as prepared as possible before you ever even begin searching for a house to buy.
As a general rule, this preparation should begin around a year before you plan on buying a home and would include:
1) Work On Your Credit Score
Your credit score is a major factor in determining your eligibility for a mortgage. Give your credit score the boost it needs to ensure you can qualify for the best possible rate on your new mortgage. Pay off all outstanding debts, continue to pay your monthly bills, and avoid opening up any new accounts. Before long you should start to see a pretty nice improvement in your score.
2) Find Out How Much House You Can Afford
Over the course of the year, work on figuring out what kind of monthly payment you would be comfortable making on your current salary. By analyzing your finances for a year, you should know how well your bank balance will be able to hold up during periods of high spending (such as on your heating bill during winter for example).
3) Save For The Down Payment
Almost every mortgage on the market will require you to pay a down payment of some form. This amount can range anywhere from 3.5 – 20 percent of the value of the home, so you should start saving well in advance. Ideally you will want to put enough money down to avoid paying premiums for products such as PMI (Private Mortgage Insurance) if possible.
4) Keep Saving
Saving is the most important thing prospective home buyers can do. Not only will you need a stack of money for the down payment, you will also have to cover closing costs, inspections, appraisals, and other renovation or maintenance work that needs to be completed on the house during the first few months you live there.
5) Get Preapproved For A Mortgage
Having completed the other steps, you should be in great shape for your meetings with lenders regarding your mortgage. It is important to seek preapproval before you begin your house search, as this will prove to sellers that you are a serious buyer and will make the paperwork a lot easier during the closing process.
Though buying a home may seem like a daunting process, it doesn’t have to be. By taking the time to prepare before you dive in, you will be able to get through the process as smoothly as possible.