With a new year well underway, many people set their sights on home ownership as something to strive toward. Whether you are considering the idea of purchasing a home or you have already made the decision to take the leap, now is a great time to make sure you are on track to reach your goal.
Follow the steps below to work toward home ownership in 2017.
Step 1: Automate Your Down Payment Savings
When it comes to saving for a big purchase, there is one tried and true rule that financial advisors say anyone needs to implement to make their goal a reality: pay yourself first.
Paying yourself first means automating part of your banking situation to automatically divert funds to a specific savings accounts before it enters any sort of main account. The idea behind automatically deducting the money into a separate account is that if you never see it in the first place, then you won’t miss it or spend it.
The key to paying yourself first is that the money then needs to remain untouched while it accumulates for your big purchase – a new home. The money should not be used for any sort of financial emergencies.
Step 2: Check Your Credit Report
Checking your credit report is one of the most important steps you can complete to make your home buying process as stress free as possible.
The three-digit credit score or your report is important because it can influence your mortgage rate, with a better credit score typically leading to a better mortgage rate. While a difference or 1 percent may not seem like much at face value, when you add up the cost of the additional 1 percent throughout a 30-year mortgage, the extra expense can be significant. For this reason, it is best to find out your score early so you can work to improve it if necessary.
And don’t just check your score, check the entire report. Examine the report carefully for any errors. It can take some time to get any mistakes rectified, so it is better to identify these early in the home buying process.
Step 3: Shop for a Preapproved Mortgage Loan
One of the best ways to show that you are a serious homebuyer is to get preapproved for a mortgage loan from a bank or lender. Being preapproved certifies you have the proper financial resources to undertake the purchase or a home and it helps to set a realistic picture of what your budget can be.
To get preapproved a financial lender looks at items such as tax returns, W-2 forms, debts and other financial assets to determine the amount of money they will lend. The amount of money you are approved for helps to solidify you budget, especially if you an unsure how much you can afford, and signifies to potential sellers that you are a serious buyer.
Step 4: Keep Your Money Where It Is
It seems obvious enough not to do, but many people make the critical mistake of moving large amounts of money between accounts or making larges purchases prior to buying a home.
During the loan preapproval process a mortgage lender reviews your financial assets to assess your financial stability and ability to pay back the debt. Moving around large sums of money while applying for a home loan can make your bank accounts appear in flux rather than stable, as well as inadvertently harm your credit score.
Step 5: Start Living on a Monthly Budget
Buying a home is a large purchase and can change your life in many ways, especially when it comes to monthly budgeting.
To best prepare yourself for life after a home purchase, create a working budget of how your new home purchase could influence discretionary income. Factor in items such as higher commuting costs, HOA dues, increased utility bills, and other possible expenses that you will incur after your home purchase.
Once you have established how purchasing a home will affect your budget, start implementing the changes before you buy a home, especially if you anticipate having less discretionary income. It will be easier to adjust to the changes now rather than after you purchase a home and have other stressors.
Let Wilshire Homes Help You Purchase a New Home in 2017
As a trusted homebuilder, Wilshire Homes has helped families to find new homes in Austin and San Antonio for more than 25 years. Our sales counselors work with potential buyers to find a floor plan, community, and location that fits their budget and desires.
Learn more about what it means to have a new home Built Around You. Contact us online or call 888-406-7087 to speak to one of our sales counselors today