Planning To Buy A Home? Six Reasons To Start Planning Today

Date : Dec 30, 2013

Buying a home is a life-changing process, but it doesn’t have to be filled with the stress that typically comes with a major life milestone. If you start planning for your eventual home purchase today, you will be in a much better position to negotiate better rates and deals on your mortgage, and you will be able to take your time when you want to find the right home for your family. Part of planning to buy a home is being prepared, proactive and ready when the time comes to buy a home.

Saving for the Down Payment

One of the easiest tasks you can start to prepare for buying a home is to start saving for your down payment. Depending on the price of the house you will want to buy, you will need to save anywhere from 10-20% of the purchase price. Starting now means you will have less to come up with when you find the right property. Consider adjusting your monthly budget to prepare for a mortgage. For example, if you currently pay $1000 rent, but would love to purchase a home with a $1200 mortgage, take that extra $200 per month and put it into a separate savings account for your down payment.

Preparing or Repairing Your Credit

Whether you have great credit or your FICO score is struggling, you will want to know what your credit looks like to banks and lenders. If your credit is good, make sure to maintain your good score until you are ready to buy a home. Make sure you make all your payments on time, if you have a habit of forgetfulness, set up automatic payments. If your credit score is lower than you would like, there are services for credit repair that can help you make a plan and get your score back up with a little time and effort.

Research Mortgage Options

Knowing what you can afford and what interest rates you can expect will help you to budget for all of your home costs before and after the purchase. You can look through a wide range of options when it comes to mortgages, from different lender agreements to length of the loan to find what works best for your situation. Find out what rates banks are currently offering and what options you have for getting a better rate.

Adjust Your Budget

A quick way to save even more money and get used to the costs associated with home ownership is to adjust your budget early. If you start saving your expected home costs as least six months out, you will have not only gotten used to what you will be paying monthly, but you will also have some extra savings. These extra costs include property taxes, home owners insurance and all utility payments that you might not be accustomed to paying as a renter. If you act as if you are paying these bills, but pay them into your savings account, you will have extra for an emergency or housing expenses later on.

Get Pre-Approved for Your Mortgage

The final step before purchasing a home is to get pre-approved for a mortgage. If you do this, sellers are more likely to choose you in a bidding war, and you can find yourself in your new home much sooner than if you wait. Many REALTORs won’t even work with you or start showing you homes unless you have a pre-approval. Remember, most agents don’t get paid unless you buy a home, so why would they waste their time with someone who wasn’t likely to close?

Develop Employment History

What many people don’t know is that not only do mortgage lenders want to see that you are making enough money to afford a mortgage, but they want to see that you are consistent. If you find yourself changing employers often, you’ll want to find one you can be happy with and develop a loyal relationship to. Generally, lenders want to see that you have worked for the same employer for at least two years. This means that if you plan on using your partner’s salary to qualify for a loan, they will want to develop a history at the same job as well.

Whether you hope to purchase a home soon or you see it years into the future, it’s a good idea to start planning today. With proper savings and budgeting, you can be well on your way to living in your dream home sooner than later.

Article and insights provided by Kandace Heller.http://goo.gl/upQ6is