Like all things worth having, if you want it bad enough, you need to prepare for it. The same concept applies when transitioning from renting to owning a home. The transition process demands one thing from you: sacrifice. This isn’t a fact, but it is the one word that comes to my mind when looking back on my journey to homeownership. Here are some tips to simplify your home buying process.
Credit Score: If you’re anything like me you are obsessed with your credit score. This figure determines your interest rate and tells a lender what type of borrower you are. If you do not know your credit score I highly recommend downloading the Credit Karma app. This app will not only give you insight to your credit score, it will also notify you of any credit changes, credit inquiries, and also provides tips to improve your credit score.
Savings: Your down payment is not the only payment required of you when purchasing a home. There are closing costs, lender fees, and home inspections costs. Closing costs consist of city and county taxes (depending on how your contract is written). Lender fees consist of loan origination fees, points (paying a fee to lower your interest rate), and appraisal fees. Keep these additional fees in mind when purchasing a home. Preparing for these costs will prevent any surprises at the close of escrow.
Pre-approval: The previous two steps will prepare you for getting a preapproval from a lender. Lenders will request your tax returns, run your credit score, and request your bank statements (to verify proof of down payment & closing costs). Obtaining a preapproval prior to your search is important. It will provide you and your Realtor a realistic budget of what you can afford and allows you to hone in on your home search.
Find A Realtor: If you haven’t already done so, this is the point in which you will need to find a Realtor. Be sure to identify a Realtor who has the time to hold your hand and walk you through the entire process.
By taking the money you spend on rent and spending it on your mortgage you will pay down your loan, over time build equity, and strengthen your financial future.
