When you’re preparing to buy a home, you’re preparing to make a huge financial investment in your future. There can be a lot of stress that goes into buying a home, but also many benefits. Once your home is paid off, it’s yours for as long as you live there. It’s a great way of preserving wealth, and it might even generate wealth over time if home values go up. Still, you can’t just walk into a store and buy one. That’s why it’s imperative that you keep on top of your finances as you prepare to make this huge change to your living situation. That way not only will you be able to afford it but you’ll also be able to enjoy owning a home without stressing about how you’re going to afford to keep your home.
Check Your Credit Score
It’s been said since the beginning of credit scores, but the higher your credit score the better. Having a decent credit score means that lenders are more willing to trust you, meaning you’ll be able to pay better rates when it comes to your mortgage. For that matter, you might need a minimum score just to get financing in the first place. That means that if you’ve gone this far without a credit card or a credit history, now would be the time to start establishing one. If you do have a credit score but it could use some work, the sooner you get on improving it the better.
Clean Up Your Budget
If you’re not tracking your expenses now, you should do so soon. Just following all your bills for 30 days can be eye-opening to how much money you might be hemorrhaging. You don’t necessarily have to cut every streaming service and start cooking all your meals at home, but it shouldn’t be that hard to trim at least some of your more frivolous expenses off of your budget if you’re not already running a tight ship. For that matter, see if there’s anything you can do to boost your income, whether it’s an available promotion at work, some freelancing, or just a side gig that can provide you with a little extra cash.
Find a Lender
At some point, you’ll need a mortgage company to finance your purchase of a home. Unless you can pay for it all in cash at once, financing is a necessary part of the process. It’s actually a good idea to get pre-approval before you start home shopping so you know what your realistic budget is when it comes to the kind of house you can afford.
Don’t Spend It All
Regardless of how much money you free up for your home, don’t spend it all on the new house. At least, don’t do it all at once. You might find problems with the home that need fixing, you might want to redo the landscape or get new appliances, and you’ll likely have quite a few home improvement projects you want to do. There will also be the costs involved with moving into the house. Leave room in your budget for flexibility.
Buying a home can be one of the biggest and perhaps scariest financial decisions you ever make, but you need to know how to financially prepare to buy a house before you can hope to accomplish it. Either strengthening or getting a handle on your finances is one of the first steps to knowing you’re able to afford a home, and what kind of home you’re able to afford. It may take a little bit of planning or it may take a lot of work, but either way if you’re ready to buy a house then preparing financially for it is one of the best things you can do to make that dream a reality.
