How to Prepare to Buy a House in One Year

Written by Posted On Monday, 22 April 2019 11:05

Buying a house could be overwhelming, particularly when you need one within one year. It often takes a lot of time and effort to search for one that is suitable for you, your needs and budget. However, with good professional assistance and proper planning, you could turn your dream of home ownership into reality. Keep reading to learn how to prepare to buy a house in one year.

How to Prepare to Buy a House in One Year - Expediting the Process

1. Know the Budget

The first thing you need to do before browsing for different home listings is to find how you can afford one by talking to a lender. After reviewing your financial information, such as your debt, assets, and income, the lender could provide you with a prequalification letter that specifies the potential mortgage. This would help you determine the price range that you can target and the neighborhoods that you could purchase a house in. However, keep in mind that a prequalification letter won’t guarantee your loan.

2. Improve Credit Score

Improving your credit score could increase the chances of approval and help you reduce the interest rate on your mortgage. In most cases, you might find it difficult to get a mortgage approval with a credit score that is below 625. Those with more than 700 in credit scores could be qualified for lower interest rates, while the best offers are often available to those with credit scores of more than 750. There are many things that you can do to increase your credit score in the year before the purchase. Make sure to consult with your financial advisor.

3. Determine Your Down Payment

If you are planning to purchase a house in the next year, perhaps you already have some cash. In a competitive housing market, some buyers might benefit from offering a large down payment. However, do not assume that you have to provide 20% down. In fact, you could make smaller amounts if you are qualified for some programs for first-time buyers or veterans. However, those loans might require you to pay for insurance that can add to the monthly costs.

4. Set Up a Housing Emergency Fund

Many future home purchasers tend to pay attention to savings for a down payment. However, it is also important to set up a cash fund to be prepared for unexpected repairs and some emergencies. Once you have become a homeowner, there might be many things to renovate or repair, and the costs may not be as cheap as you’d expect.

5. Shop Around

Many people often go with the first mortgage offer that they receive. However, they might get a lower interest rate by shopping around and finding a better deal. Ideally, it is advisable to request quotes 30 to 40 days before purchasing the house. You could request estimates for fees and interest rates from different firms at no charge. Thus, make sure to take time to look around.

The Bottom Line

Purchasing a house can be a significant investment, and if you are ready to make a move, then congratulations! Make sure to follow all of these steps to ensure you can meet the financial requirements for a real estate deal and know how to prepare to buy a house in one year. Good preparation would save you a lot of money in the long run.

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