The spring home-buying season is right around the corner. Here's how to prepare now.
With the spring season comes home-buying season. Since buying a home is a big decision that requires a good deal of preparation, it's smart to start now. If you're thinking about buying a home soon, here are 5 steps you should consider taking now.
1. Check your credit.
If you're not regularly checking your credit at all 3 major bureaus (TransUnion, Experian & Equifax), now would be a great time to see where you stand. Getting approved for a mortgage typically requires healthy enough credit, so you"ll want to check now to avoid any surprises later.
2. Find a lender and get pre-approved.
If you find that your credit is healthy, now may be a good time to line up a lender and seek mortgage pre-approval. It's one step you can get out of the way before you start shopping.
3. Zero in on a neighborhood and price ranges.
While you may not be ready to attend open houses and showings, you should start thinking about which neighborhoods you might like to focus on. Start getting an idea of what houses cost in your neighborhood or neighborhoods of choice.
4. Figure out how much you can put down.
It's also a good idea to take stock of your savings to see how big of a down payment you can afford. Typically, if you can't put down at least 20% of the price, you'll have to pay PMI (Private Mortgage Insurance) until you have at least 20% equity in the home you'd buy.
5. Figure out how big of a monthly payment you can afford.
Being able to afford a home of your own isn't just about the down payment and mortgage. It's also about knowing you'll have enough budgeted every month for your payments. Remember, just because you get approved for a big mortgage doesn't mean you'll be able to afford the monthly payments.
If you're thinking of buying a home, the above are just some of the things you should be considering ahead of time. And if you find you're not quite ready to buy, that's okay. Buying a home may be the biggest investment you end up making, so prepare your best, whether it's this spring, during home-buying season or beyond.
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What You Need to Know:
There are various types of credit scores, and lenders use a variety of different types of credit scores to make lending decisions. The credit score you receive is based on the VantageScore 3.0 model and may not be the credit score model used by your lender.
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