buying a house
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It can take almost a full year to get your finances in line before you buy a home, housing experts say. So if you know you want to buy a house within the next six months or so — such as people hoping to make the leap in the spring — you should start your financial housekeeping now.

Preparing sooner with your finances and paperwork can increase 

the chances of landing the lowest interest rate, leading to saving thousands of dollars over the loan’s life. 

Here is a checklist of the things you could be doing in advance to reach that goal.

Know your budget. Get a sense of what you can afford based on the other bills you have to pay per month, including your future new mortgage. A Prequalification letter by a lender can advise you of what price range you should stay based on your income, assets, and debt. But keep in mind that prequalification letters don’t guarantee the loan. 

Start calculating other expenses and add a closing cost, typically a percentage of the purchase price. Also, property tax rates should be included as they are part of the monthly or yearly fees you need to afford.

Check your credit report to confirm all of the loans and accounts are listed under your name. It can take months to have an error removed from your credit report. Also, this gives yourself time to fix the problem before applying for loans.

Maximize your credit score and boost it by increasing it above 700 as the best offers are available to credit scores of 750 and up. To do this, try to consolidate credit cards below 30 percent of the available credit or pay them off to qualify for lower interest rates.

You can also lift your score by paying bills on time, as is the first red flag that goes on a person’s FICO score. Payment history is the No. 1 factor to lower credit scores. Also, applying for a card requires a credit check and could lower your score. Moreover, closing a card can also lower your credit score by reducing your credit history.

How much money should be saved for a down payment is usually 20 percent of the property’s cost. However, you can qualify for certain programs, such as those offered to first-time homebuyers and veterans. The Federal Housing Administration requires a low down payment of 3.5 percent of the purchase price, and those backed by the Department of Veterans Affairs don’t require any down payment.

Avoid major purchases before applying for a loan as mortgage lenders may review your bank statements to see if you have enough money. Big purchases add to your debt load affecting your debt-to-income ratio, which can make it harder for you to qualify for the loan.

Talk to your broker to see what else you can do to increase your chances of purchasing your dream home. Sometimes writing a letter about why that home is perfect for you could help you get it.

Don you need more regarding purchasing a home? Call today at 954-227-4727

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