Whether you’re planning to buy a home, or you have no plans to buy a new home, it’s so important to do what you can now to put you in the best position to buy when you do find your dream home. So here are 3 things you can do today – right now – to prepare to buy a home whether it’s soon or later.
If you still have some of that COVID-19 stimulus money, a tax refund, or any other “extra” money (perhaps from not spending as much on eating/going out), here are a few tips to put yourself in the best position to buy a home.
1. Pay down debt
Pay down any debts you have – credit cards, auto loans, student loans, personal loans, medical bills, mortgage, etc. – especially if it’s in collections.
Even just paying the minimum payments will help. Most loans and credit cards allow you to set up auto-payments for the minimum payment or any amount you choose. This makes sure that you don’t miss a payment, and missed payments are not great for your credit.
If you can pay something completely off, maybe a maxed-out credit card or a debt with the highest interest rate, that would be a fantastic boost for your credit!
The higher your credit score, the lower your interest rate.
2. Save your money
We know, “save your money” sounds like such a basic thing by now. But be honest – how much are you saving? How much could you really save per month if you were committed to saving as much as possible? Is there anything you’re spending money on that you could save instead?
When it comes to buying a house, you’ll not only need money for a down payment (usually 3.5%-20% of the purchase price), but you’ll also need money to cover closings costs, inspections, utility setup and transfer fees, moving costs, and everything else that comes with moving into a new home.
Even if you aren’t planning to buy a home, it’s still recommended to have savings for emergencies, retirement, and general peace of mind. Having extra money in a savings account, earning at least 1-2% to keep up with inflation, will expand your options and make you prepared for unexpected expenses – including finding your dream home!
3. Get pre-approved for a mortgage
The best part about this is that it’s FREE! Getting pre-approved won’t cost you anything (except maybe a few points temporarily knocked off your credit score).
By applying and getting pre-approved for a mortgage (we recommend our lender partner, Lisa Meyer), you’ll find out how much house you can afford, get an idea of a monthly payment and down payment, and have a solid plan for when you eventually do go house hunting.
So – are you thinking about buying? Wondering if it’s actually possible for you? (Most likely it is – trust us!) We’d love to sit down with you to make a plan to prepare to buy a home, whether it’s this year or years from now.