The holiday season will be over before you know it, and it will be time yet again for New Year’s resolutions and house hunting season. If you’ve thought that next year is the year you want to buy a new home, here are a few things you should be doing right now:
1. Save
If you haven’t already started saving, now is the time. Although there are many options for low down payment mortgages, especially for first-time homebuyers, the down payment is not the only expense involved in the purchase of a new home; there are closing costs, the costs associated with moving and the price of any improvements or repairs you want to make upon move-in. While traditional mortgages require a 20% down payment, there are options for loans that require as little as 3.5% down, however, closing costs can be another 2-3%, and then you’ll have to set up an escrow account. Last, lenders don’t like to see borrowers use every last dime up at closing, and usually require that you have some money left in the bank–at least enough to cover a couple months’ worth of payments.
2. Get Your Credit in Order
The better your credit score, the more likely you are to be approved for any loan, and a mortgage is probably the largest loan most people take out. According to a recent post by Freddie Mac’s VP, Danny Gardner, the average credit score among homebuyers last quarter was 751, which represents a very reliable borrower. Gardner gives his advice for what you should be doing now to get your credit in order if you’re thinking of buying next spring. His six easy steps include taking actions as simple knowing what your credit report says right now.
3. Make a Wish List
Making a wish list is not just fun, it’s a great way to get focused as you prepare to shop for a home. Your realtor will need this information too, so they can narrow down the field to homes you would actually consider living in. In order to make your search as efficient as possible, make a list and separate it into categories like “absolutely must have,” “would be nice, but not a deal breaker,” “could take it or leave it” and “not important.” There are several tools on the web that will help you get started, like this downloadable worksheet from RealtorMag.
4. Get Pre-qualified
There is a difference between being pre-qualified for a mortgage and being pre-approved. A pre-qualification means a lender takes a look at figures that you provide about your income, debt and assets, and then estimates how much mortgage you can afford. It’s totally free and there is no obligation. It’s a great way to determine what price range you should stay within and what kind of monthly payments you can expect.
To talk to a lender and be pre-qualified for a mortgage today, check out lonestarfinancing.com.
