With the holidays approaching, you might find yourself wishing that you were spending the holidays in your very own home. If you think you’re ready for home ownership, next year might be the perfect time for you to buy! Ensuring that you are financially ready for home ownership is the key to buying a home that you can afford for the long term. Check out these steps to take now to make sure you are ready to buy a home next year.
Get Your Credit Under Control
When you first start to plan a home purchase, your credit score should be one of the first things to come to mind. Without a favorable credit score, you won’t have access to the best possible mortgage—or any mortgage at all! Your first step should be to request your credit reports from the credit bureaus and check for any errors. If you find any, you can formally dispute them in hopes of getting them off your credit record. Then, you can get to work increasing your credit score with time on your side. To improve your score, you can:
- Pay all of your bills on time
- Pay down your credit card balances
- Keep your credit usage limited to about 30 percent of your credit limit
- Avoid opening or closing credit cards
You should strive to increase your credit score as much as possible as lenders give the best rates to the loan applicants with the best credit.
Determine Your Budget
Your home is likely the largest purchase you will ever make, so it makes sense to have a strict budget when going into your home search. Before you even begin looking at homes online, make sure to think through your budget and determine how much you are comfortable spending on a home. A good rule of thumb is to have no more than 30 percent of your expenses dedicated to housing, but your home will be even more affordable over the long term if you purchase a house that takes up even less. If you need help understanding how much home you can afford, check out this handy mortgage affordability calculator or reach out to a housing counselor in your area.
Save for a Down Payment
Having a down payment is crucial, and down payments tend to take a long time to build up. To avoid private mortgage insurance, lenders require 20 percent or more down! However, if you are okay with paying this small fee in your monthly payment until you reach 22 percent equity, many lenders are open to smaller down payments. In fact, with the NC Home Advantage Mortgage™ with down payment assistance, you could get a home for as little as 3 percent down! Learn more about this mortgage product and talk to your lender about your down payment requirements. Until then, check out these easy savings tips!
Talk to a Lender
Your lender is your financial partner for your home purchase, and it’s never too early to start building that relationship. Finding the right lender for you can help ease the home buying process and ensure that you get a great mortgage that you can afford for the long term. Contact a lender today to get started on your journey to home ownership.
Are you ready to gear up to buy a home in 2018? Check out our many Resources for Home Buyers to get started on the right track!
