The largest investment you'll make in a lifetime is typically a property purchase. Most homes cost six figures, which requires some financing help above and beyond your down payment. Before you start house hunting, explore these financial tips to improve your home-buying experience.
Clean Up Your Credit History
Bank Rate explains that cleaning up your credit history should be at the top of your priority list. Borrowing money for the purchase is a major hurdle, and you want as few obstacles as possible in your way. Download and ready your credit report from start to finish. Verify any amounts, descriptions and creditors listed on the report. Although everyone has a mixture of both good and bad credit experiences, each line item must be true. Correct any mistakes so that you have a clean report for any lender to analyze.
Maintain Steady Employment
Your credit report might be incredibly clean, but your resume is questionable. Lenders want to see a steady, employment record so that they know you're able to pay back the borrowed balance. Try to remain with an employer for as long as possible. It's understandable to have two or three employers over a decade, but changing jobs every few months will reflect poorly on your record. Make clear notes about any gaps in your employment history too. Lenders want to know if you were productive when you were unemployed. Career lulls happen to everyone.
Look for Government Incentives
The federal government often has lucrative incentives for first-time homebuyers, reports Forbes. Research any incentives that might help your situation as a homebuyer. These credits can significantly reduce your mortgage balance, which makes it easier to pay back the monthly amount. These incentives have a lot of terms associated with them so be sure to read through the fine print.
If you're a low-income buyer, there may be some perks to buying a home in your income bracket. You might have worked with a debt-relief company, such as Freedom Debt Relief, that helped you out of a tough, financial situation. With a clear future ahead, incentives can easily get you into that dream home.
Avoid Other Large Purchases
Lenders will run your credit several times before you close on a property. They'll essentially know about your spending habits, especially when it comes to large items. Because property purchases are major events, don't plan on buying any other large items around the same time. Cars, jet skis and other assets can skew your financial numbers, which reduces the amount you can borrow toward a home. Reserve these purchases for when you're established at the property.
Visit Banks for Pre-Approvals
It's never a good idea to walk into any open house with a blind eye to what you can afford. Visit several banks to see about pre-approvals on property loans, suggests Time. These lenders run your credit, analyze your liabilities and offer a price range that you can afford. Be honest about your income and debts when you're looking for a pre-approval because this determination can streamline the purchasing process. With concrete numbers in your hand, you'll be able to bid on a desired property.
Plan to be Flexible
As you close in on the home that you want, be flexible about the last-minute details. Pay an extra month of rent at your apartment so that the current homeowners have enough time to move out of the property. They might cover your closing costs as a thank you as well. Flexibility during the transition will only help you on financial and mental levels as the home becomes yours alone.
If you don't discover the home of your dreams during your first few weeks of hunting, you may want to take a break. Allow the market to move forward for several weeks or months so that the inventory changes once you start searching again. By taking your time with the home-buying process, you'll secure that dream property in little time.
