Now that the economy appears to (finally!) be moving again, are you thinking of moving too? Maybe you’re ready to move out of your rental and into something you can call your own. Or perhaps your family has grown beyond the comfort level of your current home.
Spring is a great time to move, whatever your reason. And with home prices (not to mention interest rates) still low, it’s a buyer’s market out there in many parts of the country. So how can you ensure you get the best deal on a home you’ll love for years to come? Follow these six steps:
1. Look at your credit report. This is something you should be doing on a regular basis anyway, but it’s especially important when you’re planning to take on a mortgage. Potential lenders will certainly do a credit check to see if you qualify and some are even checking it twice – once again before closing. Looking at your credit report before you apply for a home loan will give you a better understanding of your financial standing and provide you the opportunity to leverage what terms your credit score merits in the eyes of lenders. It’s also important to correct inaccuracies and compensate for anything that may be dragging down your score before you apply.
2. Whip your household budget into shape. Again, budgeting is something you should be doing on a regular basis. But if you’ve been a bit lax about it lately, house hunting season is a great time to get back on track. Get a feel for your monthly expenses, so you can make an educated estimate of how much you can afford to pay for a mortgage when you buy a house.
3. Decide how much you’re comfortable spending. Set a spending limit for yourself and be committed about sticking to it. Don’t be swayed by a lender’s willingness to give you a loan for more than you think you can afford. Just think what could happen to your credit report and credit score if you end up with a mortgage you can’t afford.
4. Set your priorities. What you’re looking for in a new home will depend on your individual needs. Maybe you have kids so a good school district is important. Perhaps you’re looking for a shorter commute to work. Make a list of your priorities and promise yourself you’ll stick to them.
5. Use all available resources. Just as you used the Internet to do your own credit check, you can start your home buying search online. The Internet can help you get an idea of what’s available in the area where you want to live. A realtor can help you refine your search further – and as a buyer, you don’t pay anything for a realtor’s services.
6. Keep your credit in mind. Did we already say that? It bears repeating. Your credit report and credit score is an essential aspect of your ability to buy a home. Get behind its power and use it as a tool in your arsenal to get the best deal possible on your mortgage loan. Home buying is an investment in your future and your finances that – when done wisely – should help build your credit score, not undermine it.