Buying a home can be one of the most gratifying gifts you can give yourself and your family. It can feel like a rite of passage ushering you into many new and exciting seasons of life. It’s a goal for many, but it is only attainable for few. But why? Today we are going to unpack 3 things to keep in mind if your goal is to buy a home.
Written by Katie Harlow, HBX Realty.
Start Early and Be Educated.
It’s a common misconception that you can wake up one day, decide that you are ready to buy a house and then go put an offer on one the next day. In reality, it’s not that simple.
Before buying a house, there is some groundwork required in getting prepped to buy. Nothing is too tricky or complicated, but buying a home needs some simple prep work beforehand that can transform your experience.
First, know your credit score (thank you, Credit Karma!) and try to get a little understanding of how credit works. A quick google search can go a long way to understanding credit score. Your credit score may be awesome or it may need a little work. Either is okay, but know what you’re working with and then do any necessary work to get it where it needs to be.
We prefer to use myFICO, as it is more accurate than Credit Karma. It does require a small monthly payment, but this little investment will go a LONG way!
A credit score of 620 should be your absolute minimum goal and then build from there. The better the score, the better the interest rate, the better the payment. It’s a domino effect.
Talk to a Lender, and Choose What You Can Afford.
The first thing I want to know when working with a new homeowner is if have they talked to a lender and if their lender suggested a monthly amount they can pay. Talk to a lender and get an idea of how much house you can afford.
Honestly, deciding what you can afford each month is the most important part of buying a home. Every so often, a lender can approve someone for way more than they could ever afford, but the buyer goes with what the lender says anyways. And yeah, if you’re okay living on ramen then that huge house price can be possible. I doubt, however, many of us want to give up our fun lifestyles!
Don’t be house poor!! My suggestion is to be payment-based when talking a house purchase amount. By doing so, you will be less likely to over-extend yourself and more likely to make a wise decision in your home purchase. It’s easier to start with less and go up in both price, size, and features – then go backwards.
Avoid Big Purchases!
This one is HUGE, and I can tell you from experience it’s crucial to think about! If you want to buy a house within the year, avoid making big purchases on cars, boats, RV’s, you name it!
When I bought my last house, I had also bought a new car a few months prior, so I had extra hoops to jump through because of that purchase. It messed up my DTI (debt to income ratio) along with having a credit ding, and I had to do some switching around to make the pre-approval process go more smoothly.
My simple advice: Avoid those purchases until AFTER you buy your house! Drive the clunker a few extra months – I promise it will be worth it in the end!
Another thing? Keep the design plans on your Pinterest board until after you close. Don’t finance furniture or any other big home projects until after you have the keys in your hand! Any pull of your credit can derail the loan process, so it’s best to just avoid it altogether!
Not too hard right?! These are some simple tools that I hope make the goal of home ownership a tad easier for you! Always keep the end in sight because owning that home will be worth ALL the work you put in to get there, and you’ll enjoy it all the more!