Here Are Some Financial Steps to Take

Buying a home is a huge accomplishment and a major life milestone, but it’s typically not something you can do on a whim. And if you don’t already have your finances fully in order, it’s never too soon to begin the process. Here are a few quick tips on how to prepare your personal economy so that you can afford your own home by the end of the year.

Know if You’re Ready

First, you’ll want to decide if you’re truly ready for homeownership. PennyMac’s first house guide explains that this is a long-term investment. This means you’ll likely need to live in the same spot for five to 10 years and know that you are prepared to tackle common home maintenance issues, such as minor plumbing repairs and landscaping. You also have to look past a current proposed mortgage amount as your home insurance and taxes may go up. In other words, as your cost of living rises, you want to assure yourself that you are in a position for your income to grow along with it.

Find a Realtor

Perhaps one of the most financially impactful things you can do before you buy a home is to partner with an experienced realtor. Not only does Gabe of Stuart Florida Real Estate not charge a commission to buyers, but he can also help you identify great deals and help you haggle if the home you want is out of range.

Save for a Downpayment

Depending on the type of financing you choose, you may be able to get away with as little as 3.5% down. FHA loans typically have the lowest down payment, but a traditional loan may have more favorable long-term terms. To save for your down payment, you may need to make a few minor lifestyle adjustments in the interim. Skip vacations, cut back on discretionary spending, and consolidate high-interest credit cards into a singular lower-interest loan.

Check Your FICO Score

Your credit score can never be too high, but it can be too low. Typically, you’ll need a credit score of a minimum of 580 to purchase a home. Once you get up in the 700s, you’ll be eligible for a better loan rate.

According to Experian, there are many factors that affect your credit score, including your credit history and whether or not you make your payments on time. If your credit score could use a boost, pay down some debt and make sure that everything is up-to-date. You’ll also want to take a quick peek at your full credit report so that you will have time to dispute any inaccuracies before you apply for a loan.

Gather Your Documents

Buying a house today is not like buying a house pre-2007. So if it’s been a while, you may be surprised to find that your mortgage company may ask for everything from three years’ worth of tax returns to a full list of your assets and liabilities. And if you’re self-employed, be ready to jump through a few more hoops. You will have to prove, among other things, that you plan to continue to remain a contractor and that your earnings have been constant for the last few years.

Once you have these financial steps taken care of, you can begin your home search — ideally, three to six months before you intend to move. Having money matters mastered now will ensure a smoother process once you find the home of your dreams. Small steps, such as gathering your documents and deciding if you’re truly ready for homeownership, will have a positive impact on the entire home buying experience. Ready to get started? Reach out to the Gabe Sanders Stuart Florida Real Estate Team now at (772) 888-2885.

Guest post authored by Suzie Wilson