Buying a home is a huge purchase and the more prepared you are the better off you are. An article by Cathie Ericson on realtor.com discusses 5 habits you should start now if you’re planning on buying a home in 2017. If a goal of buying a home is in the near future for you and your family these are some great ways to start preparing so you can achieve that goal and move into a new home in 2017. Below is a snippet of the article and how you can be successful in starting this process.
Habit #1 Buying a home: Automate your down payment savings
If you’re trying to squirrel away the recommended 20% down payment, that works out to about $40,000 for a $200,000 home. That’s a huge chunk of cash, so unless you’ve been the recipient of an inheritance or have recently won the lottery, you can never save too early or too much.
“The down payment takes more money than 99% of people plan for,” warns Joshua Jarvis of Jarvis Team Realty with Keller Williams Realty Atlanta Partners in Duluth, GA.
Yet one practically painless way to get started is to automate your checking account to regularly set aside a small amount of your paycheck into a separate savings account dubbed your “house fund.”
“Amassing enough for a down payment takes discipline and perseverance, but setting up automatic savings can make it easier,” points out Realtor® Marcia Goodman with Re/Max Gateway in Gainesville, VA. “If you never see the cash, you won’t spend it.”
And you don’t have to put down the full 20%, either—there are other options. But it’s best to save as much as you can.
Habit #2 Buying a home: Build your credit history and keep it clean
To get a mortgage, lenders will want to see evidence that you’ve paid off past debts. As such, keeping on top of your credit cards and car and college loans is a crucial mortgage must-do.
But don’t steer clear of credit altogether. If you’ve never had a credit card or a bank loan, you won’t have a credit history. Once you have credit established, keep it pristine. Pay all your bills on time—this cannot be overemphasized.
“I had a client who made $250,000 a year and was denied a mortgage because his credit card payments were always late,” says Alexandra Axsen, managing broker of Lake Okanagan Realty Ltd. in Kelowna, BC.
Dean Sioukas, founder of Magilla Loans in Sacramento, CA, also advises not using more than 30% of your available credit, as recommended by the credit bureaus.
(Read the full article of the 5 habits here)