Financial Tips to Prepare You for the Homebuying Process
- 19 August, 2019
- By Admin: Debbie West
- Comments: 00
Typically, finding a home that you can envision yourself (and loved ones) living in for the foreseeable future is no simple task. And once you find the perfect home, the buying process brings additional challenges and can seem to drag on forever.
However, if you do some preparation with your finances, the process can feel less overwhelming, and you’ll likely come out with better results. If you’re looking to buy a home, try implementing these financial hacks throughout the process.
Research Your Target Area
When you’re looking for your next home, you want to make sure to do your homework. Reviewing the statistics of the housing market in the area you’re interested will better equip you to make a decision on what kind of home you should consider and what you’re willing to pay.
One thing to look at is the average down payment for homes in the area, as this number can fluctuate dramatically across the country. Homebuyers in Southern Orange County paid a 20.1 percent down payment on average over the last three months, so you should consider that number as you’re choosing a home in this area.
Factor in Maintenance and Emergency Repairs
Most homebuyers think about a down payment, mortgage, and insurance, but many people fail to factor in the costs of maintenance and repairs. If you live in any home for long enough, you will have to deal with regular upkeep, and the need for unexpected repairs will ultimately arise. A thorough home inspection can give you an idea of when certain elements of the home will need attention (e.g., aging roof, cracking foundation, electrical problems, etc.), but you still won’t be able to predict everything that could go wrong.
In the event that your HVAC system quits or you come home to a burst pipe, you will want to be financially prepared so that it can be fixed as soon as possible. Therefore, rather than buying a home that maxes out your budget, opt for a home that costs less than you can afford.
Investigate Your Credit Pulls
Anytime you’re applying for a home loan, you will have your credit score checked by multiple creditors. In this case, two different kinds of credit inquiries can occur: a soft inquiry or a hard inquiry. A soft inquiry is the most common, and it occurs when you or a potential creditor checks your credit score. However, sometimes a creditor wants to review your whole credit history, which is considered a hard inquiry. If you have enough hard inquiries, it can negatively impact your credit score. As such, it’s important to always confirm with a potential creditor what type of inquiry they want to perform before they do it.
Check for Inconsistencies in Your Credit Reports
Ideally, you want to request a credit report from the three credit reporting bureaus — Equifax, Experian, and TransUnion — each year. You can get one free report per year from each of these, and knowing your credit score will help you make a number of important decisions. However, sometimes there are inconsistencies between the three reports, and it’s up to you to spot them and have them corrected. If there is any negative information on even one report, it can significantly impact your homebuying process.
Getting your finances in order will help make the entire homebuying process go more smoothly. Be sure to look at the housing market in your target area, and consider the costs of maintenance and emergency repairs when you choose a home. Also, ask any potential creditors what kind of credit inquiry they plan to do, and fix any inconsistencies you find in your credit reports. These financial hacks will help you rest easy, knowing that you got the home of your dreams the responsible way.