A 5-step plan for preparing to buy a house
Although owning your own home is often considered an essential component of the so-called American dream, wouldn’t it make sense to plan effectively to ensure it doesn’t turn into a nightmare? After more than fifteen years as a licensed Realtor in New York State, I have developed what I often refer to as RICH IDEAS for wise action when it comes to buying a house. With this in mind, this article will attempt to briefly consider, research, review and discuss a 5-step plan to properly, effectively, wisely prepare for this process and proceed accordingly.
1. Collect/accumulate enough funds for various requirements and needs: It’s also smart to go ahead – prepared as much as possible from the start. Okay – before you start looking for a house, start saving money in a systematic way. Remember that you will not only need funds for a down payment (often, but not always, 20%), but also funds for other final expenses, including but not limited to prepaid real estate taxes, utilities , and other so-called escrow items. In addition, most lending institutions require a demonstration and proof of funds equal to several months for mortgage payments.
2. Get a copy of your credit report (if you are husband and wife, get both): You have the right to request a free copy of your credit report from one of the major credit bureaus/companies once a year. Review this document carefully and correct any errors. If your rating isn’t as high as a credit institution might want, start taking steps to improve it and improve it sooner rather than later!
3. Payment of other obligations: Credit institutions use formulas to determine qualifications for obtaining funds. These are usually focused on one’s debt-to-income ratio. Therefore, pay off your other debt before you start the process!
4. Do not add any other debt: Avoid acquiring more debt, no matter how convenient and/or attractive it may seem at the moment. Don’t fall into the trap of accepting new store accounts as this can compromise your creditworthiness when looking for a mortgage!
5. Shop for homes within your means: Avoid the trap of becoming household rich and looking to purchase a home that is beyond your comfortable means! Know how much you can afford comfortably and safely, so choose wisely and stay comforted!
Since for most of us the value of our house is our biggest asset, doesn’t it make sense to proceed carefully and wisely? Will you be up to this task?
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