How To Financially Prepare Yourself For Buying A Home
If you are finally to the point in your life where you want to own your very own home, but are not yet in a financial position to make it happen, you will want to keep reading. By making use of the following suggestions, you will have no problem turning your situation around so you can start talking to a real estate agent. The sooner you start preparing, the sooner you will be packing a moving truck with all of your stuff.
Take A Look At Your Credit Reports
It is important to know that you have three companies that you need to contact for a copy of your current credit report. You must check out each one, because each one can have different information on it. Some creditors may only report to one credit agency, while others may report to all three. Also, there could be discrepancies on one report, but not on the others. This is why you want to get a free copy of your credit report from TransUnion, Equifax, and Experian. Should you spot anything wrong on any of the reports, you will need to report it immediately. This will allow time for the credit reports to be fixed and your credit score adjusted.
Start Saving For A Down Payment
Many lenders like to know that you have a good chunk of money saved for the down payment. The more you have, the easier it will be for you to receive an approval for the home mortgage that you need. Do not make the mistake of taking out a personal loan for the down payment, as this will not look good when you apply for the mortgage. Plus, the accumulation of any new debts could hurt your debt-to-income ratio, which could then in turn hurt your chances of being approved for the home loan that you will need in order to get the house.
Improve Your Debt-To-Income Ratio
It is vital that you have more monthly income than you have monthly debt. This will show the mortgage company that you are not only able to afford the monthly mortgage payment, insurance, and taxes, but any emergency expenses that could pop up. To improve your debt-to-income ratio, you will need to pay off some of your bills, even if it is just a few of your small balance credit cards, and increase your monthly income. You can increase your income by taking on a second job or asking for some overtime at work.
There are also some companies that are dedicated to helping prospective home buyers who have little to no credit, such as SWE Homes. They can offer unique options for getting into a home as quickly as possible, even without a good credit score. The harder you work towards improving your financial situation, the easier it will be to buy your home once you are ready to do some serious house shopping.