Is your heart set on becoming a homeowner in 2014? If so, make it easier by embracing these 5 resolutions:
1. Increase Your Credit Score
The better your credit score, the lower your mortgage interest rate, so do all in your power to raise those numbers.
Begin by getting a copy of your credit report. Check it carefully for any errors, and if you find them, dispute them. If you have some old debts that you could pay off with a bit of effort, do it. But don’t close any credit card accounts. Keep them open by using the cards occasionally, then paying the bill in full each month.
Meanwhile – don’t charge more, and absolutely don’t even shop for big ticket items that will trigger a check on your credit. Don’t give your Social Security number to anyone.
2. Save Up for that Down Payment
While low-down-payment loans are once again available, you’ll typically need a 20 to 25 percent down payment to avoid mortgage insurance and qualify for the best mortgage rates. So start cutting expenses and putting money aside for that down payment.
Most of us have at least a few expenses that will cut $5, $10, $20 or more from our daily expenditures. For instance, you could eliminate that cup of espresso on the way to work, or bring lunch from home.
3. Get Pre-Approved
Becoming pre-approved for your mortgage loan is important for two reasons:
First, you’ll know just how much home you can afford, based on your down payment funds and your current debt and income ratios.
Second, once you’ve found the home, the sellers will look favorably on your offer because they’ll have the assurance that you actually can get a loan and close on the purchase.
4. Begin the Search Well in Advance of the Purchase
Begin long before you’re ready to make the purchase – by researching neighborhoods to decide where you want to live. Think about the places you go every day and focus on neighborhoods that will give you the shortest commute time. But don’t stop there – drive around and see if the neighborhoods offer other amenities that are important to you – such as a park, a convenience store, a nearby mall, etc.
If you have children, research the schools and learn which neighborhoods you must choose from in order to have your children in the school you favor.
Then start reading the ads for homes in your chosen neighborhoods. You’ll learn whether one neighborhood is more expensive than another, and what you can expect to pay for a home that meets your needs for size and amenities.
5. Choose a Top Real Estate Agent
Take the time to find a real estate agent who will really work for you. Get references, go to their websites and blogs, read their testimonials, and then have at least one real conversation before signing a buyer agency agreement. Type “real estate agent” and the name of your town into a search and you’ll soon learn which agents know most about your community.
When you’re well prepared, your home purchase can be an exciting, pleasurable adventure. So be prepared!
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