Buying a home can be an exhilarating experience! There are some steps you'll need to take to make your purchase process a success.
Get your financial house in order (we'll talk more about a downpayment later). Unless you know you have stellar credit, I recommend you start preparing to purchase a home at least a year in advance.
Review your credit report. If you find any errors, write letters to the credit bureaus and have the errors corrected. Make sure you pay your debts on time every month. Even a 30 day late can have a negative impact. If you're short on cash, make at least the minimum payment to avoid a 30 day late. While we're on the subject of credit, pay your credit card balances down. A high amount of available credit has a positive impact on your FICO score.
While you're getting your finances in order, start dreaming about your future home. What kind of lifestyle do you see yourself living? Do you have a neighborhood you're in love with? How much space do you need? Do you need to be close to schools or shopping? What about family and friends---do you want to live near them? These are all questions your Realtor will ask you. You should have a the answer.
Owning a home comes with responsibility. You need to take into account the following financial obligations you'll have: higher electric and gas bills, water and garbage, lawn service and pool upkeep. These are just a few considerations. Don't forget about an emergency fund to pay for unexpected repairs.
The mortgage amount your qualify for is not necessarily the amount you can afford. Qualifying for a mortgage does not take into account vacations, hobbies and sports, eating out or other entertainment. This is why I mentioned you need to know the lifestyle you plan to lead.
So let's say you've determined how much you can afford to pay each month and taken the above expenses into account. Take that money and put it into a savings account. Example: you pay $1000 for rent and can afford a $1500 mortgage payment. Take the extra $500 add your additional homeowner expenses above and save it.
Depending on your loan amount and loan program, you'll need at least a 3.5% downpayment for an FHA loan. Conventional loans vary from 5-20%. Get in touch with a good Realtor to learn more.
Now, let's talk about saving for homeownership:
1. Set a deadline. Do you need to move in 1 year or six months? Determine how much time you have to save your downpayment.
2. Open a savings account for your downpayment. This way, the money is separate from your other accounts and this account is purposed for a specific endeavor. You'll be loathe to pull any money out.
3. Paying yourself first is a must. Deposit the money into your savings automatically. You will not miss the money as much and it makes for a good habit.
4. Dump any large monthly expenses that you can. This will help your debt to income ratio.
At any point, contact a Realtor. A good Realtor will answer your questions and help guide you through the process. A Realtor will also be able to refer you to a mortgage company when the time comes.
To start looking for your DREAM home in Fresno, call me today at 559-790-1905. I look forward to helping you.
Sincerely,
Shantay R. Davies
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