Want to Get Ready to Buy a Home? Let's Do This!

So you want to buy your first home? Or trade up to a larger or more expensive home? Start getting prepared financially well in advance.

If you already own your first home, and are thinking of trading up, click here. If you want to become a homeowner for the first time, or the first time in a while, here we go...

While a person's home is often their largest single source of wealth, homeownership is not for everyone. Look at your plans for the next few years. You might change jobs and move to another city? You might not be able to count on the two incomes you have right now? An elderly relative might need to move in with you? If you are sure homeownership is a good "move" for you...read on.

f you have been fantasizing about owning a home, you are not alone. "Getting Ready to Buy a Home" is a quest that many begin but it may seem especially unattainable to those who dream of breaking the cycle of non-ownership. Credit issues can be a stumbling block, casting a shadow over your dream. But don't fret; this guide is here to ensure that your journey to becoming a homeowner is successful.

Let’s begin the journey by addressing the elephant in the room—credit issues. Having such issues does not permanently ruin your home ownership dreams. The first-time home buying steps start with a commitment to improving your credit situation. After all, it's all about showing lenders that you can be entrusted with a mortgage.

Start by ensuring you are always on top of your bill payments. Make sure to meet at least the minimum payment and aim to do so on time or within 30 days of the due date. This first step gives you control over your financial performance, necessary to navigate the journey you're on.

Your financial sense will speak volumes to mortgage lenders. Paying your bills on time shows that you're reliable and can manage your debt responsibly. No matter how difficult this may seem, never take this lightly. Remember, consistency is key here.

Credit To Get a Mortgage

Often, the question of how many lines of credit you should open arises. In this instance, more is not always better. Rather, pick and choose wisely who you open credit with. Be selective!

Having said that, it's essential to have some credit. If you have no credit or limited credit, your credit scores may not calculate because there is not enough information to go on. Ironic? Maybe, but some credit, managed well, is better than no credit at all - in the eyes of a prospective lender.

Further, it's sage advice not to use all your entire available credit. Leaving some credit unused and readily available for emergencies shows financial discipline and readiness for unforeseen circumstances. Lenders are more likely to favor this.

'Credit to get a mortgage', it's a phrase showing up on your searches frequently, isn’t it? This refers to the importance of good credit in the process of getting a mortgage. Now, to improve your creditworthiness, some work is needed.

Get Your Credit Score Up

The first order of business is understanding your credit report. Take time to study your credit report and identify any discrepancies. Fixing errors on your credit report can have a substantial positive impact on your credit score.

Next, consider ways to reduce your overall debt. Start by checking the interest rate on all debts you are paying on. Start with high-interest rate debts, as these cause the most damage. Ones that are 12 or 18 months same as cash types of credit should be the last ones you pay off, but make sure you pay these off on time because you will often pay interest on the whole original balance, not just the remaining balance if you miss the payoff date.

Instead, some people find that starting with the smallest debt and paying it off first, then moving on to the next smallest, gives them the most satisfaction and sense of accomplishment. You need a plan you can stick with, right?

Respect your credit limit. Keeping your credit usage below 30% of your total limit positively affects your credit score. This shows potential lenders that you're not overly relying on credit.

More Tips & Tricks to Improve Your Credit Here...

Next Steps...

So you’ve done all you can to fix your credit. Next, start saving for a down payment. The larger your down payment, the more attractive you are to lenders, and the lower, and more manageable, your mortgage payment will be. Examine your budget carefully for items that are not really essential to day-to-day life, and cut some of those out, putting that money into your savings account.

You might also think about getting prequalified for a mortgage, even if you are not ready just yet to jump in. This gives you an idea of how much a lender might be willing to lend to you and helps narrow down your home search to fit within your budget. It will also let you see where you might want to pay things off to make more room in your house payment budget.

BUT always plan on a house payment that doesn't stretch you too thin. Just because you "qualify" for it doesn't mean you should do it.

Remember a mortgage lender will qualify you for the most you can buy. Buying the most expensive house you can qualify for is not the smartest thing to do because you want to be able to eat out sometimes, take a vacation maybe?

You have heard the expression "house poor"? That means you are spending too much of your income on your mortgage payment. That will take all the fun out of being a homeowner, if every month you are spending too large a part of your paycheck on housing.

You may have a hobby or your child may participate in a sport or activity that takes some of your money every month. The mortgage lender is not taking things like that into account when they pre-qualify you. They are also not counting "extras" like eating out or unexpected expenses such as car repairs. So leave room in your budget for the unexpected and for some fun.

Working with a seasoned realtor can ease the process. Currently (this may change soon), the seller of the home you buy pays the realtor, so it is a free service to you. They can guide you in the right direction and boost your confidence during this exciting yet intimidating adventure. BUT and this is important: realtors are paid on commission and have an incentive to steer you to the most expensive house you can buy.

The "First Time Home Buying Steps" may seem scary, filled with mystery and causing self-doubt. But remember that you are not alone, and plenty of helpful resources are available to guide you through the process.

Confidence and determination are so important. Push away any voice whispering, "I'm not good enough", or "I don't deserve this." Owning a home is not a privilege for the elite. It is achievable for anyone with determination, careful planning, and financial discipline.

The journey will require time, grit, and some sacrifice. Yet, the end reward—a home you can call your own—is more than worth the effort. And for most people, it will become their largest source of wealth. Are there a lot of words and phrases that are coming up that you don't understand? Click here for more information.

Some Final Thoughts...

Continue educating yourself about homebuying processes and maintenance. You may even want to join first-time homeowner groups online for support and tips. Understand and prepare for the significant amount of paperwork involved in buying a house.

Keep an open mind about your choice of areas and home types. Don’t let what you initially envisioned limit you, as this may cause you to overlook viable options. Consider whether you like yard work, own a lawnmower, or have the extra money to pay someone to maintain your yard. If the answer to all three of those is "No", a condo or townhome that provides the yard maintenance through the Homeowners association fee may be best for you.

Above all, take time to breathe and celebrate small victories on your journey. Each step towards improving your credit and saving for your dream home is worth congratulating.

"Getting Ready to Buy a Home" is not just about dreaming but walking the path that leads to it. While it may seem steep due to credit issues, know that the path is manageable with the right steps. Want to buy a home solo? Click here.

Remember, this journey is yours, filled with unique challenges and victories. Embrace the process, grow from the experience, and look forward to the day you get to say, "Welcome to my home!"

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