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Are you thinking of buying a home in the near future but aren’t sure how to go about making your dream home a reality?
Buying a home is a major financial undertaking, so you definitely want to take some time to get your finances in order and give your credit profile a boost if necessary to put your best foot forward.
Before you start searching for a home and making an offer on a property, there are some steps you should take first to make sure you achieve your goal of buying your dream home. Here are some tips to help.
In order to come up with a down payment, you’ll need to save up for it. Down payments add up to tens of thousands of dollars, especially in more expensive markets and if you’re putting a larger down payment towards the purchase of a home.
As would be expected, it takes a long time to save up that amount of money. That’s why you’d be prudent to start saving up for a down payment long before you decide to buy a home. This will give you some time to slowly grow your monetary stash.
A great way to save up for a down payment is to put a certain percentage of your monthly income away each month, or a specific dollar amount. And to avoid forgetting to put that money away every 4 weeks, you may want to consider automating your savings.
That way, you not only won’t have an excuse that you forgot, but you also won’t have to manually do anything to put that money away. It will all be done automatically for you. You can do this by setting up your checking account to automatically save a specific amount of money every month.
Get in touch with your financial institution and ask about how you can set this up. Alternatively, you might also want to speak with your HR department about setting up a system that ensures that a certain portion of your pay is deposited into a separate account, if possible.
There are several factors that lenders take into consideration when determining whether or not to approve an applicant for a mortgage, and credit score is one of them. In fact, your credit score plays a significant role in your ability to secure a home loan, so you want to make sure that it’s healthy.
Your credit score tells lenders what you’d be like as a borrower. A high credit score typically means that you’ve been diligent with your bills and have not missed any payments. It also means you’re not racking up sky-high credit card bills and carrying a large balance month over month.
But a low credit score usually means the opposite. If you have a low credit score, your lender may not be as willing to extend a loan to you, so your chances of getting approved will be lower.
And if you are approved, you’ll likely be given a higher interest rate to offset the lender’s risk. As such, your mortgage will cost you more over the long run. That’s why it’s so important to go into the process with a health credit score.
Out of all the above-mentioned ways to improve your credit score, perhaps none is as important as ensuring that you pay your bills on time every month. A string of missed or late payments can have a major impact on your credit score.
But the opposite is also true: by ensuring that every bill is paid in a timely manner, your credit score can become very strong.
And while you’re at it, make sure that your bills are paid in full rather than paying just the minimum amount. This is applicable to credit card statements, which allow for a minimum amount to be paid.
Avoid this trap, as it can make it more and more difficult to pay down your credit card debt. Instead, pay off the full statement amount to help give your credit score a boost while keeping your debt load down.
Not only should you be doing what you can to save up for a down payment, but you should also be cutting back on your spending to both save up and make more room for an extra bill in the form of a mortgage payment.
Your mortgage payment will eat up a big chunk of your monthly income, so you’ll want to make sure that you’re able to comfortably make these payments.
There are plenty of ways to scale back on your spending to help keep more money in your wallet every month.
In many cases, sacrificing a little can do wonders. Many first-time homebuyers are open to making sacrifices to buy their first home faster. New clothes, a new car, traveling … What are you willing to sacrifice?
When you’re ready, let’s go get your dream home together with Sammamish Mortgage!
Sammamish Mortgage can help. We provide many different mortgage programs and flexible qualification criteria to borrowers in WA, OR, ID, and CO. We’ve been helping borrowers since 1992, and we’d love to help you too. Contact us today to get started!
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