How to turn your dream home into reality.
If you’re still renting or living with relatives, you may be thinking that a place of your own would be a big lifestyle improvement. While homeownership can be rewarding, it’s also a major commitment. That’s why it’s smart to plan ahead and begin preparing for the day you go from renter to homeowner.
With that goal in mind, here are some tips for you.
Start by requesting your free credit reports at AnnualCreditReport.com. You can download your “big three” reports from Experian, Equifax and TransUnion so you can take your time reviewing them. If you spot any errors, report them to the credit agency as soon as possible and request that they be corrected.
If you want to look at potential budgets, many homes for sale at Realtor.com and similar sites feature a monthly payment scenario. A typical mortgage payment includes interest and principal, with taxes and insurance paid into an escrow account.
If you’re not ready to begin shopping, ask for a pre-qualification instead. This is fast, free and will give you a good idea of how much home you’ll be able to comfortably afford.
If you’re ready for a loan pre-approval or have questions about the home financing process, contact KBHS Home Loans today. You can rely on us for fast, friendly advice and guidance.
With that goal in mind, here are some tips for you.
1. Give your credit a check-up.
This is really important, as your credit score gives all lenders — not just mortgage lenders — a good idea of how responsible you are with money. A higher score can also save you big-time by earning you a lower mortgage interest rate.Start by requesting your free credit reports at AnnualCreditReport.com. You can download your “big three” reports from Experian, Equifax and TransUnion so you can take your time reviewing them. If you spot any errors, report them to the credit agency as soon as possible and request that they be corrected.
2. Get serious with savings.
Take a look at homes for sale that are similar to what you plan to buy, and aim to save 20% of their average price for your down payment. Putting 20% down isn’t always mandatory, but it may earn you a lower interest rate and lower monthly payments. Even if you end up choosing a mortgage with a smaller down payment, moving into your new place and making it yours will be easier if you have cash in hand for these expenses.3. Take a look at your future.
If you’re buying a home with a spouse, partner or friend, make sure you share similar plans for the next five to 10 years. Here are some topics to consider:- Will your dream home be in a big city, suburb, or quieter area?
- Do you look forward to recruiting an army of garden gnomes, or would you rather skip lawn care by purchasing a condo unit?
- If you have children or are planning a family, will you want a home in a kid-friendly neighborhood with highly-rated schools? (Most property listings provide details of these and other factors.)
4. Preview your homeowner’s budget.
Most lenders recommend spending no more than 28% of your monthly income on a mortgage payment, although some loans may allow you to go a bit higher. Affordability is the key, so make sure your monthly homeowner’s budget won’t cripple your cash flow.If you want to look at potential budgets, many homes for sale at Realtor.com and similar sites feature a monthly payment scenario. A typical mortgage payment includes interest and principal, with taxes and insurance paid into an escrow account.
5. Get pre-approved for a mortgage.
If you’re ready to begin viewing home, request a loan pre-approval from your chosen lender. This effectively begins your loan application, so proof of your credit rating, assets and employment will be required. A pre-approval can also help you get ahead in a hot market, as it tells potential sellers that you’re a serious buyer.If you’re not ready to begin shopping, ask for a pre-qualification instead. This is fast, free and will give you a good idea of how much home you’ll be able to comfortably afford.
6. Choose a quality mortgage provider.
A reputable lender will answer your questions honestly, walk you through pre-approval and recommend the best financing option for your needs.If you’re ready for a loan pre-approval or have questions about the home financing process, contact KBHS Home Loans today. You can rely on us for fast, friendly advice and guidance.