Because the purchase of a new home is the biggest financial responsibility you will ever take—and the highest potential financial risk you will likely ever make—you need to be prepared for what is to come. As such, before you take the dive off the deep end—and into the glorious lagoon of home ownership—make sure you have taken the proper TSW Real Estate Group steps to avoid drowning in the abyss.
It may sound simple—and it is—but it can help just to have your needs written down on paper. When you are looking to buy a home you will want to be able the check off the following things:
1) strengthen your credit score
2) determine how much house you can afford
3) save for your downpayment (and your closing costs)
4) build up a healthy savings account
5) get preapproval from a bank for your mortgage
6) choose and buy your house
STRENGTHEN YOUR CREDIT SCORE
This, of course, is a simple idea that can be very complicated. To improve your credit score you need to have active credit so have a strategy for getting bigger and bigger credit limits. Whether that means starting with a secured credit card, a store credit card, or even just auto insurance, find ways to establish better and better credit.
DETERMINE HOW MUCH HOUSE YOU CAN AFFORD
Basically, use a mortgage calculator (your lender should have one) to determine what your monthly payments would be, based on:
- total mortgage amount
- interest rate
- term (how many months)
SAVE UP FOR YOUR DOWNPAYMENT
This may be the hardest step for most people, particularly when times are tight. Still, make a schedule to save a certain amount every month within a reasonable time frame.
BUILD A HEALTHY SAVINGS ACCOUNT
Basically, just continue saving as much as you can as a safety net. A healthy savings account, though, counts as an asset, which can help with lending.
GET PREAPPROVAL FROM YOUR BANK
Speaking of lending, once you know how much house you can afford and you have saved up for the downpayment and you can show some assets, it is time to start getting the bank involved. They can “preapprove” your loan so that you know how much money you can spend, essentially.
CHOOSE (AND BUY) YOUR HOUSE
Finally, it is time to shop for the right home that fits both your budget and your needs (and hopefully maybe a few dream items too).