Top Financial Advice for Soon-to-Be Homebuyers

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Preparing your finances for a home purchase should be the first thing you do BEFORE looking at homes. Sadly, many don’t and are disappointed when they find a house they love only to discover they can’t afford it. If you’re planning on buying in the next 6 months, take the advice of some trusted agents and mortgage specialists on how to prepare your finances now.

Know Your Credit

Get a copy of your credit history for free from either Experian, Equifax, or Transunion and go over it carefully! Correct any errors and if you can’t, write a letter explaining why. Make sure your score is over 580 before you talk to a lender. – Marcus Brown, Portland OR Real Estate

Increase Your Score

Try and get your score as high as you can before applying for a home loan. This will lower your interest rate and may offer you better terms overall. Most people can get a home loan with a score over 600, and 680 is even better. Scores over 750 often get the best rates and terms.  – Erika Rogers, St. George Realtor

Pay off Debt

Pay off as much debt as possible, consolidate and don’t cancel cards with a zero balance as it will show lenders you have available credit. Too many maxed out loans show high risk, so make sure you have some available credit on loans and credit cards. – Don Payne, Columbus OH Realtor

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Save as much as you can

You’ll need out of pocket costs even if you plan on rolling equity from one sale into the purchase of another. Often times the appraisal is out of pocket, closing costs and especially a home inspection. Lenders also like to see you have liquid cash in case of an emergency. Bruce Simon, Farmington Hills MI Real Estate Agent

Know Your Budget Ahead of Time

This is more than just a mortgage payment; you’ll probably have your taxes, interest and insurance rolled into a monthly payment so just because the lender says your payment will be so much, check to see if that includes everything else. And don’t max out your budget either in case you need extra to make changes and improvements once you move in. – Eve Alexander, Orlando Buyers Broker

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Talk to a Lender and Get a Pre-approval Letter

Make sure you know your budget before looking at homes. Talk to a lender and get a copy of a pre-approval letter stating you are financially ready and able to buy a house in a particular price range. Sellers will see this as a gesture of good faith and that you’re serious about buying, AND you’ll know you can actually afford the house too. Peter Westbrook, Cash Home Buyer in Sacramento

Don’t Make Any Large Purchases

Try not to buy a car, take out a new loan or do anything drastic with your finances while your preparing to buy and in the process of closing on a home. Any major financial changes, even changing jobs, can affect your ability to obtain financing. AD Whitehurst, Panama City Beach Condo Sales

Don’t Change Income, Unless it’s for the Better

Any loss in job, income, or even position in a company can affect your loan. Keep things as status quo as possible until you close on the loan. You don’t want anything to affect your chances of getting a loan. – Joanne, Home Inspectors of Western Washington

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