Prepare Your Finances
Understanding your financial situation is crucial before starting your home search. Let's break down what you need to know.
Mortgage lenders recommend you do not buy a home that is more than 3 to 5 times your annual household income.
If you are not purchasing a home with cash, you will need a mortgage pre-approval provided by your mortgage lender. A lender will work with you to get a loan that meets your needs. Some buyers are concerned with keeping their monthly payments as low as possible, others want to make sure that their monthly payments never increase.
Check Your Credit
A mortgage requires a good credit score. You can improve your score by:
- •Paying down credit card balances
- •Continuing to make payments on time
- •Avoid applying for a new credit card or car loan until you have been approved
- •Avoid making big purchases until you have been approved
- •If possible, avoid job changes until you have been approved
Save Cash for a Down Payment & Other Expenses
In order to make your dream of buying a home a reality, you will need to save cash for your down payment, earnest money, closing costs & home inspector.
Typically between 3.5% & 20% of the purchase price
Money you put down to show you're serious about purchasing a home. It's also known as a good faith deposit.
For the buyer run between 2% & 5% of the loan amount
Costs $300 to $500