3 Steps You Must Do Before Buying Your First Home

Posted on

Have you been thinking about buying a home instead of continuing to rent? Will this be the first time that you or anyone in your immediate family has actually purchased any real estate? Buying a home is exciting but it can also be scary if you've never had to go through the process before. Thankfully, there are many resources out there to assist you with the home buying process. But before you start looking at places for sale in your area, there are a few things that you should do or consider doing first. These include:

Check your credit: A few decades ago, it could be expensive to get a copy of your own credit report. These days, there are multiple apps and websites out there that allow you to look up your credit score and to see if there are any mistakes on your credit report. Although a lower credit score won't necessarily eliminate your chances of qualifying for first time home buyer loans, a lack of mistakes should mean a higher credit score which will, in turn, allow you to qualify for better loans with more favorable terms. If you notice anything on your report that doesn't belong, it's essential to dispute it and to get it removed before you start your loan application process.

Keep your cards: A lot of people close off credit cards as they get ready for the loan process. They think that fewer credit cards will make their credit score go up. While it is true that too many credit cards can have a negative impact, closing too many cards at once can also have the same impact. When processing first time home buyer loans, lenders want to see responsible spending. If you have three cards but they have almost nothing on them, this is an indication that you are responsible because you haven't maxed out the credit cards.

Age your savings: For similar reasons as above, lenders want to see that you have money in the bank that you're not spending. If you did something like winning the lottery and you're planning to use that money as a down payment, you may have to stop and wait a little while. Many first time home buyer loans want to see the down payment amount sitting in your account for 90 days or longer in order to prove that you're fiscally responsible enough that you can avoid the temptation to spend the money.

Contact a lender to learn more about first time home buyer loans.