1st-time home-shopper? Start these 3 steps now.
As the housing market recovers and a new year brings new plans, you, like many others, may be considering buying your first home. While it’s tempting to just focus on where you want to live and worry about the rest later, you may run into serious roadblocks if you’re not starting these 3 steps now.
1. Start saving
You probably already know you’ll need some cash for a down payment. Putting a certain amount down isn’t just a good idea because most mortgage lenders require it — a big down payment can also help you get a better deal on mortgage terms. All else equal, the more you put down, the less risky the mortgage appears to lenders.
Something else to consider when saving for a down payment? Private Mortgage Insurance (PMI). If you don’t have enough cash for at least 20% of the total mortgage loan amount, a PMI premium will be added to your monthly mortgage payment. Lenders can require that you pay this PMI premium until you have at least 20% equity in your home.
2. Start planning your move
Chances are, if you’re buying a home for the first time, you’re renting now. If that’s the case, take a look at your lease. If you’re getting close to the lease’s expiration date, make sure you can rent month-to-month because buying a home can take time.
3. Start monitoring your credit
Your credit health is a critical factor when it comes to qualifying for a mortgage or getting the best terms. Building good credit can take time for any number of reasons:
- You haven’t established a long-enough history of responsible credit use
- You have to dispute a negative credit report item inaccurately reported to one or more bureaus
- You just applied for and opened several new accounts
Even if you just checked your credit and it’s in excellent health, you’ll want to do what you can to help protect it in the time leading up to your mortgage application. With TransUnion Credit Monitoring, it’s easy to:
- Protect your TransUnion credit report with Credit Lock — block all access with a single touch.
- Know where you stand with your TransUnion credit score & report, personalized debt analysis and other powerful credit planning tools
- Stay in the know with UNLIMITED score & report refreshes, 3-bureau monitoring & alerts, and 24/7 access at home or on the go.