Buying a home isn’t a decision to be made lightly. It’s a big commitment that must be made after a lot of forethought and financial planning—not just because you’re tired of apartment hopping or want a change on a whim. There are certain steps you should begin taking once you have made the decision to buy a house. These tips are designed to prepare you as much as possible financially for the house buying process, in Flower Mound or elsewhere.
- Build good credit. Credit scores are critical to purchasing a home. Banks will only approve a home loan for those with credit scores that are within a certain range. When credit scores are lower, even if they are approved, the down payment and monthly installments will likely be much higher. By building up your credit before applying for a home loan, you are investing in a future of more affordable monthly payments. Make sure to check the items on your credit report, too, to make sure that everything reported is accurate. One last credit tip: don’t apply for more credit at least a year before buying a new home. Check your credit: https://www.annualcreditreport.com/index.action
- Learn what you can afford. It may seem difficult at first to determine the price range you should shoot for when buying a home. Typically, the value of the house is greater than your entire annual income, so how can you tell what you will be able to afford in the long run? A good rule of thumb is a monthly payment, including taxes and insurance, that does not rise above 28-31% of your monthly income. Before you begin your home search in Flower Mound, calculate what you believe you’ll be able to afford, so you know what houses to look for. Free Mortgage Calculator: http://www.bankrate.com/calculators/mortgages/new-house-calculator.aspx
- Save, save, save. As soon as you begin considering buying a home, it is important to begin setting aside money you can put towards this life-changing purchase. One large expense will be the down payment, which can vary by as much as 3.5-20% of the total cost of your home. The more money you are able to put down initially, the less you will have to pay in the future. Besides the down payment, do not forget to keep in mind closing costs—certain unavoidable expenses and fees associated with your home purchase. Although these too can vary greatly, closing costs are likely to be between $2,000 and $4,000.
- Mortgage pre-approval. Before you begin searching for your Flower Mound home in depth, seeking pre-approval on a mortgage could tell you up front what kind of mortgage you qualify for. This way, you will know which houses will fit in your price range, and the process of buying your house may move much quicker with your finance plan already in place. Get Pre-Approved
- Prepare for long-term costs. As a new homeowner, you have embarked on an exciting adventure for years to come. That future, however, will almost certainly involve home upkeep—including maintenance, pest control, and any number of other issues. It’s important to remember that the expenses of buying a home do not stop after the initial purchase. Being aware of the long term necessity of financial planning before buying a house in Flower Mound will make you feel more prepared once you’ve moved in.
Buying a home does not have to be an anxiety-inducing process. It is an important decision, however, that should be made with serious forethought. If you are a new homebuyer, consider these financial tips before beginning the search for your new home in Flower Mound. With all the complexity of purchasing a home, please feel free to contact me with any questions regarding this article or the home buying process.