Every home buyer wants their purchase to be a success. What’s the best way to success? It’s being prepared for the road ahead. An Exclusive Buyer’s Agent can definitely help make the buying process a success. In any case, buyers who take the time to prepare themselves stand a far higher chance of coming out on top than those who leave everything to the last minute. With that in mind, here’s a look at the key habits to build before starting your journey towards home-ownership. Just about every successful buyer had these habits and as you’ll soon learn it’s not hard to see why.
1.) Start Cutting Down on Luxury Purchases
Make it your goal to save enough to make a 20% down payment. Sure, it’s still possible to get a loan with less than 20% down. But if you want to avoid paying private mortgage insurance and get the best rates, then 20% is the minimum amount you should aim for. Start by looking for ways you can cut down on your spending. This might seem like small potatoes at first but over time small cuts to your budget can make a difference. The key is to make a habit of constantly checking your spending. This could mean eating out less often, canceling your gym membership, or reducing your monthly internet charges. Learn to be frugal and buy only what you absolutely need.
2.) Make Regular Deposits into a Home Savings Account
Once you’ve cut down on your budget it’s time to start putting away that money you are saving. Open a savings account with your bank and start making regular deposits. This can be weekly or monthly, whatever works best for you. Just make sure you make consistent deposits every time. That way you can plan ahead and get a realistic idea of when you’ll reach your saving goals. An easy way to start with this is to set aside a percentage of your salary each month.
3.) Educate Yourself on the Home Buying Process
Purchasing a home can get rather complicated. You need to be able to assess different homes, get approved for financing, understand how real estate laws apply to you and learn a bit of industry lingo. The sooner you can start educating yourself on the buying process the less time you’ll waste. Start by googling how the home buying process works in your state/county and explore naeba.org for more helpful tips. Real estate laws will differ based on your state so know what your one says. Study the local real estate market and how you can take advantage of it. Learn about financing and how you can give yourself the best chance of being approved by a lender. Know how to spot red flags at an open house and the best way to make an offer. If there’s anything you’re not sure of then do enough research until you’re sure of it.
4.) Do a Trial Run at Home-ownership
There’s a lot more to owning a house than just coming up with your down payment. There are also the extra costs you’ll need to be ready for once you become a homeowner. This includes your monthly mortgage payment and home maintenance costs. There’s also the added responsibility that comes with home-ownership that you need to be ready for. To make sure you know what you’re getting yourself into, try living like a homeowner for a month. Set aside your anticipated monthly housing expenses and what you’d need for an emergency fund. An easy rule of thumb is to save 10% of your mortgage payment for maintenance costs. This way you can test out whether the home you intend to buy is financially viable. If you can’t make your budget last the month then you’ll know you need to downsize.
5.) Build up Your Credit Score
To get a mortgage with good rates you’ll need a good credit score. Aim for a score that’s at least in the 600’s. To raise your credit score there are a few steps you can take. Pay all your bills on time. Get a credit report and correct any inaccuracies. Pay down any outstanding debt you have. Build up your credit history. These and more could see a drastic change in your credit score within a year.