Financial Preparation for Buying a Home

Real Estate

So, you’ve had enough of paying rent and receiving no equity in exchange. You want to buy a home in the Or you want to move nearer to your fob. There are a lot of reasons for buying a home in the Minneapolis area. The question is, are you financially ready to buy?

 

The first order of business is to check your credit score. FICO, developed by Fair Isaac Corporation, measures a person’s financial health. The score is made up of these factors;  payment history, 35%; amounts owed, 30%; length of credit history, 15%; and types of credit used, 10%. It’s important to take steps to correct any deficiencies in these areas. Pay off your debts. Be sure to make any regular payments like utilities on time. Refrain from applying for any new loans. You can check your credit score here.

 

Save for a down payment. If you haven’t been saving, start right now. Most lenders require at least a 10% down payment. There are some creative ways to obtain a loan with less down, but these can be risky. You can avoid having to purchase mortgage insurance by having at least 20% down.

 

There are other expenses besides the down payment involved in buying a home. The seller usually pays closing costs in order to attract buyers, but this isn’t written in stone. You’ll also encounter appraisal fees, pest inspection fees, title insurance fees, and loan origination fees. These should be taken into account when deciding on a price range.

 

Remember that it also costs money to move. Even if you don’t hire professional movers, you’ll have to pay for supplies, like boxes, bubble wrap, tape (with dispensers), If you rely on family and/or friends to help you move, you’ll need to provide food and drinks. Included in this list are supplies for any cleaning and/or remodeling needed.

 

One thing that can expedite things once you find a house to buy is pre-approval for a loan. Some sellers won’t even consider a bid from someone who isn’t pre-approved. Besides it can give you a realistic idea of what you can afford, so you won’t waste time looking at houses that are out of your range.

 

Buying a home can be complicated, so you’ll want someone in your corner. That’s a good reason to work with a buyer’s agent. Since the seller pays the commission, it won’t cost you, and you’ll have a market-wise advocate during negotiations. You’ll also save time, because you’ll have someone to help you navigate the truckload of paperwork associated with buying a home.

 

A home is probably the largest purchase you will ever make. It’s best to go into it with your ducks in a row, especially in the area of finance. Taking these steps will help the process go smoothly. Happy house hunting!