Are You Ready to Buy A Home?

Before you decide to buy a home, you need to make sure that you are ready. So, how do you know if you are ready to make the leap to homebuyer? Before you make that decision, you are going to need to take a good look at your finances.

Are you trying to decide if you should start looking at homes? Here are some things you need to think about when you are trying to figure out if you are ready to buy a home.

Credit Score

A good credit score is essential when buying a home. It needs to be as healthy as possible so you can get the best deal possible.

The first thing that you need to do is check your credit score. There are many ways that you can do this for free.

Then, you need to make sure that you look over it carefully. If there are mistakes, you are going to have to talk to someone so you can get them fixed.

If your credit score isn't where it should be, you may want to consult someone so that you can work on it to make it better. You may be able to get a better and more affordable loan if you take a few months before you apply for a loan.

Downpayment

What is a downpayment?

A downpayment is money that you put down on your home. Most loans require twenty percent of the total loan, though you may be able to get one with less. However, the more that you put down, the less you will have to pay every month.

How can you save for it?

When you are trying to buy a home, you should start saving for a downpayment. Here are some things that you can do so that you have more money when the time comes to settle on a home.

• Cut back. There are many things that you can cut back on while you are trying to save money. Going out to eat or to a bar can be costly. You can call your car insurance to see if you can get a better deal. You might also be able to do the same with your cell phone, the electric bill, and other things.
• Put money away. Many people recommend putting money back every month. Instead of paying your mortgage, you can put that amount into a savings account. Not only will this help you save money, it will also show you that you can afford to pay that much money each month.
• Get another job. You may also want to pick up some more hours at work or find another job to help you save even more money.

Budgeting

When budgeting for the downpayment, it is important to know that you are going to have other expenses during this period. These include:

• Inspection fees. You are going to have a home inspection before you buy a home. This allows you to know exactly what you are buying, looking for any major problems that will need to be fixed.
• Appraisal. Before you can get a mortgage, you are going to need to make sure that your home is worth what you are paying.
• Closing costs. Besides the downpayment, you are going to have to pay settlement costs.

Mortgage preapproval

It is important to take time to meet with a mortgage specialist. He or she will be able to talk to you about your finances to make sure that you are fully ready to buy a home.

During this time, you will have to get your paperwork ready to see how much you can afford for your mortgage. You are going to need your pay stubs and bank statements. If you are self-employed, you will need to be able to provide at least two of your tax returns to show your income.

You may want to meet with several specialists so that you get the best deal for your mortgage.

Looking to the future

Your monthly mortgage isn't going to be your only expense so it is important to start budgeting for everything else. Here are some other expenses that you may be facing.

• Electricity
• Water
• Sewer
• Television/Cable
• Phone
• Heating/Air conditioning
• Homeowner's Insurance (which may be included in your mortgage)
• Homeowner Association Fees (HOA)
• Home Renovations
• Home Repairs

Because of this, you need to think carefully about what you can afford when you buy a home. You may not be able to buy a home at the price that you are approved for.

Before you decide to buy a home, you need to make sure that your credit is in good shape. You also should talk to a mortgage specialist. If you aren't ready, a mortgage calculator can also help you. In the meantime, you should keep saving for your downpayment.