Preparing Financially to Purchase a Home
Congratulations, you’ve decided you’re ready to purchase a home. It’s such an exciting time and you want to dive right into looking at homes, but you need to slow down and prepare accordingly.
Purchasing a home is a big decision and a huge financial step, so you want to make sure you are fully prepared financially to be in a position to get the home you want, and can afford, at the best rates possible. Of course, if you have an abundance of cash at your disposal and can offer cash for the house, then you won’t need to read further, but for most of us, planning is crucial.
So, let’s break down the process to ensure your success.
- Get your finances in order. Make sure you are ready to meet with a lender to get your pre-approval. Check your credit ahead of time just so you know where your credit score stands. You can utilize sites such as Credit Karma or Credit Sesame to get a good overview. If you find issues, it is better to take time to repair those issues before seeing your lender.
- Down payment and closing costs- How much have you saved toward your down payment and closing costs? The more you can put down, the less you need to finance. Thus, making your payments lower each month. You’ll also need to budget for closing costs, which are typically 2-5% of the total cost of the home purchase price.
- Getting your Pre-Approval. This is the key. The housing market is tight right now, meaning inventory is low so there are more buyers per home. You need to make sure you are pre-approved for your loan amount- not only so you know exactly what you can spend, but so the sellers know you are serious, qualify for the loan, and can purchase the home. Often buyers who are not pre-approved will not have their offer even considered.
- Once you are pre-approved for a home loan, it is very important that you do not make any large purchases or take out any loans, credit cards, etc. You need to keep your credit profile clean and consistent with where it was when approval was made. You’ll want to continue making all payments on current rent, mortgages, car, credit cards, etc on time.
- Your real estate agent partner is also your fiduciary in the real estate transaction and is there to protect your interests every step of the way. This is why it is critical to partner with an agent/team that is experienced and knowledgeable in the local market and the field. Small mistakes can be costly ones.
At the Sandi Pressley Team we’re here to help you realize your dream of homeownership and partner with the best lenders, inspectors, attorney’s, appraisers and more in this industry to offer the most complete services to our clients. Ready to make your DREAM COME TRUE? Call us today.
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