Before starting the house hunt, there are a few things buyers need to consider.
- Credit score: Lenders are generally looking for buyers to have credit scores of at least 620 nowadays. Although the Federal Housing Administration will extend loans to borrowers with credit scores as low as 580, most banks are imposing higher scores.
- Reserves: Even when renting, financial advisers recommend saving four to five months’ worth of expenses in case of job loss or any other unforeseen event. Homeowners should add an additional two months’ worth to their savings.
- Settling down: Buyers should think about if they see themselves living in the same place for five to seven years. Homeownership is not just a financial decision, it’s also a lifestyle choice.