If you are looking to buy a home in WA, CO, OR, or ID one day but don’t think you are ready just yet, you are not alone. One of the most important tasks that you have to complete involves getting your finances in order. After all, buying a home is a big investment, and when you take out a mortgage to finance it, you’ll be committed to making regular payments until it’s paid off or until you eventually sell.
There are a few ways to get your finances in order before you buy, no matter how long you have been waiting to buy a home. Getting a firm handle on your finances with these simple steps can help you become a more competitive applicant both for a mortgage and a Denver or Boise home that is on the market.
Focus On Your Credit Score
While it is true that your credit doesn’t have to be perfect in order to get a home, a strong credit score in Seattle will increase your chances of getting approved. In addition, a great credit score can also help you get a lower interest rate on your mortgage.
Some of the ways that you can improve your credit score include the following:
- Disputing errors that might be on your report
- Reducing your debt
- Producing a long track record of on-time payments
- Avoiding late payments
- Make more than your minimum credit card payments
- Don’t spend any more than 30% of your credit card limit
- Avoid taking out too many loans or credit lines in a short period of time
All of these efforts will help you get ready to apply for a mortgage.
Open A Bank Account For Homeownership
The cost of a home is far more than a down payment and mortgage bills. The reality is that owning a home comes with a variety of expenses for which you must be prepared. Therefore, it is a prudent idea to open a bank account that is solely for homeownership expenses.
This account should contain a variety of funds including those for utilities, maintenance, landscaping costs, and even renovation expenses. This will help you visualize the amount of money that you have set aside.
Get All Your Documents in Order
Whether you’re getting pre-approved for a mortgage or are getting close to making an offer on a home in Idaho or Colorado, you’ll want to gather up all the documentation that your mortgage lender will need to finalize your home loan.
Typical documents for a home purchase include things like your paystubs, bank statements, W-2 form, and tax returns, among others. Your mortgage lender will fill you in on all the documents you should have prepared and ready to go.
Automate Your Savings
A down payment is a big part of the mortgage process and depending on the price of the home in Portland or Seattle and the type of mortgage you plan to take out, the down payment can be a hefty amount. Not only that, but all the closing costs that come with buying a home mean that you should save up enough of a lump sum of money to cover all of these costs.
One way to do that is to set aside a certain amount of money every paycheck. The earlier you start to do this, the better, as it will afford you with more time to save up.
But rather than manually depositing a certain amount of money every month into a dedicated savings account, consider automating your savings. Get in touch with your payroll clerk at work to have a specific percentage or portion of your paycheck deposited into a savings account. Or, speak with your bank about having an amount automatically withdrawn from your checking account and deposited directly into your savings account.
Automating your savings will help you avoid forgetting to make the deposit and will create a hassle-free and hands-off way to save up for a home purchase in Oregon or Washington.
Calculate The Budget
Finally, it is also smart to calculate a budget for the home. Some of the factors that are going to play a role in the sticker price of a home include the down payment, closing costs, and potential taxes. For help with this calculation, it is a smart idea to meet with a trained mortgage professional.
These are a few of the steps that you should follow to get your finances in order. These steps will make you a more competitive applicant for a mortgage.
Ready to Apply For a Mortgage?
If you’re curious about mortgages in Idaho, Sammamish Mortgage can help. We are a local mortgage company based out of Bellevue, Washington that serves the entire state, as well as Oregon, Idaho, and Colorado. Our mortgage professionals can work with you to help you decide which one of our mortgage programs is right for you. Contact us today with any questions you have about home loans.