If you’re thinking about buying a home, it’s an exciting time. As conditions improve, now might be the time to go all in on homeownership.
With relatively low interest rates and a slight uptick to the number of available homes, there seems like no better time to buy. As you prepare, here are three things you can do right now to get ready.
Boost savings
Part of the equation to buying a home, along with strong credit, is how much money you have saved. While an applicant might be well qualified for buying a home, having sufficient savings will be another requirement.
Having enough for a down payment for a home is critical. In some cases, buyers will provide about 10% to 20% as a down payment. That’s quite the financial lift, especially in an era of fast-growing home prices.
With that said, it might be time to earn new income.
Motivated buyers can explore the gig economy. With a strong demand for hired help, there are plenty of opportunities out there to bring in extra cash. Or, they can begin selling items they can do without on sites such as Facebook Marketplace or Nextdoor.
Future homebuyers can also change spending habits during this critical transition. Whatever way they can, they are finding ways to boost their savings to prepare for this investment of a lifetime.
Improve credit score
On the other side of the coin is your credit score.
The first step is to take a close look at where you stand today. All of the major credit bureaus, Experian, TransUnion and Equifax, are required to provide a free credit score. Take advantage and see where you can improve or spot errors that you can dispute to mend your credit standing.
Once you have a firm understanding of your payments and balance, you can begin to tackle debt more strategically. Before you know it, you will see positive changes to your score.
Depending on the interest rates of the various accounts, applicants can begin to pay off those cards with the highest interest rates first, accelerating the rate at which they pay off debt and saving on the amount of interest they will pay.
Reviewing your credit standing is also a good time to note due dates. Paying on time matters and will impact your score.
Get preapproval
Now that you’re feeling confident about your financial standing as it relates to your credit and savings, it’s time to take the next big essential step: Getting a preapproval.
A mortgage preapproval is more than a commitment from a lender, it’s an asset in today’s competitive market. Winning over a seller is made easier if you are preapproved.
As a preapproved borrower, you bring a lot to the table. A preapproval lets the seller know you are serious about buying a home and already have the backing of a reputable lender. Your offer, as a result, will stand out from the crowd because you are steps ahead of the competition.