How You Can Efficiently Prepare to Buy a Home

Written by Posted On Thursday, 19 December 2019 20:46

If you are one of the millions of adults facing a home purchase for the first time, there are a few things to put on your “to do” list in order to make the process go smoothly. In addition to searching for a buying agent in your area, it’s extremely valuable to know where you stand in terms of credit-worthiness, in-the-bank savings amounts, and the general price range you should look at. Many first-time buyers also get a budget boost when they refinance student loans before heading out the door to look at houses. Here’s an overview of time-tested ways to make your first property purchase a success.

Check Your Credit

Get all three bureau reports and find out where you stand score-wise. If your numbers need a little work, aim to improve them before buying a home. In most cases, it’s possible to add between 25 and 100 points to your credit rating totals by reducing credit card use, paying any delinquent accounts down to zero, and opening a savings account.

Refinance Student Loans

If you still have education debt on the books, a student loan refinance can be the answer to freeing up needed monthly cashflow. How does it work? It’s highly likely that your current credit scores are higher than when you borrowed for school several years ago. Use your new scores to get a lower interest rate when you refinance. In addition to the lower rate, you’ll get more time to pay and lower monthly payments. For anyone thinking about a real estate purchase, restructuring long-term debt can be a smart way to save and to allow for more savings at the end of each month.

Ramp Up Monthly Savings

Every prospective home buyer needs to build up savings account totals. This helps in two ways. First, you’ll be reinforcing the habit of adding to your nest egg instead of spending. Second, when the time comes to pay for things like closing costs, attorney fees, inspections and down payments, you’ll be ready.

Find a Top-Notch Realtor

There’s not a better person to have on your side than an experienced, ethical, realtor who will work to find you the place of your dreams. Spend time culling the candidates because there is a wide range of talent out there. One of the most effective ways of locating an excellent realtor is through referrals . Ask friends and co-workers who they’ve used and been happy with. You’ll get at least a half-dozen names from this system and can speak with each one on the phone.

Know What You Can (and Can’t) Afford

What can you afford? Use the old, reliable 28/36 rule and you can’t go wrong. Do the number-crunching to figure out the result. Here’s what you need to know: According to the rule, you should not spend more than 28 percent of your gross income on house-related expenses. Those include the mortgage payment, insurance and interest. Then, rework your budget as if you already are paying on the mortgage and incurring all the other house-related expenses. Your total debt amount should not exceed 36 percent of your gross income. Debt includes the mortgage, related expenses, credit card obligations, auto loans, and similar items.

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James Stevenson

Hi, My name is James and I've been involved in the property and real estate industry for 10 years now. I hope people will like to read about my thoughts and experiences in the industry and please contact me if you want to discuss my articles further!

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