Financial Planning Before Home Buying

Financial Planning Before Home Buying

Financial planning should be the first step taken in the home buying process. Many potential homebuyers find themselves unsure as to what are the best ways to save cash for buying a house or how to even begin the process. Most first time home buyers find that they are unsure where they stand financially, in terms of their finances or their credit. Or even the details of the type of house they want to purchase. The key is to feel confident in your own financial standings, and financial planning will help you avoid making mistakes when you first buy a home. Here’s 5 tips that will assist you in your financial planning and show you some of the best ways to save cash for your house.

  • Your Financial Standings: Before you can begin the financial planning process, you need to have an understanding of your current financial situation. Start by getting a copy of your credit report. Every American citizen is guaranteed the right to a free credit report once a year from each of the major credit bureaus. These bureaus are Equifax, Experian, and TransUnion. Bad credit is not the end of the world. But it will mean that you’ll most likely have to pay a higher interest rate and have to make a higher down payment. But it’s important to have an understanding of your credit report before you meet with a mortgage company.
  • What Can You Afford? This breaks down to establishing your budget. Consider all your essential monthly finances: Credit cards, car payments, child support, student loans etc. basically anything that you will need to pay every month. Now compare it to your monthly income. Once you have these numbers, you can begin calculating your monthly payment. I would recommend doing this in two ways. First, get in touch with a realtor. You can provide them with your income, essential monthly bills and credit rating, then they will begin searching for a home which meets your criteria. The second recommendation would be to check out an online monthly mortgage calculator. You can do that by registering through my website here.
  • Where Do You Want to Live? This may be one of the first things you take into account when you’re looking for a home, but there are many different factors to consider besides which neighborhood you like the most. A few of the things to keep in mind is how far is it from where you work, the prices of the homes in the area, the crime rate in the area, and if you have children, the quality of the schools in the area. This decision could have an effect on both your financial planning and several unforeseen factors as well. www.melissadata.com can provide you with a great deal of this necessary information.
  • Get Pre-Approved First: Don’t waste your time looking at homes you may not be able to afford. A lender can pre-approve you based on your debt, credit history and income. By first getting pre-approved for your loan you’ll have a better chance of making a serious offer when you find the home of your dreams.
  • Consider Each Cost: A lender prefers you be able to make a down payment of about 20% of the total home cost. But when you’re saving cash for your home, you also want to consider all other fees, including closing costs, inspection fees, loan fees, attorney fees and the various other costs that come with purchasing your first home. When you’re thinking of the best ways to save cash for your home, make sure that you count every cost in the process. A professional real estate agent will be able to walk you through this process and help you understand each fee.

Leave a Reply