Buying a home is one of the biggest purchases that you will ever make (I can’t think of many things that would be bigger), and because of that you want to be careful with what you do.
Gen Y Finances: 2017 could be most successful year in your life!
Improve your credit score.
Before you start looking at homes, you should know what your credit score is. If it is too low, then you may not even be able to get approved for a mortgage. If your credit score is low but you still get approved, then you may be hit with a high interest rate.
This is why working to improve your credit score is important.
It doesn’t have to be super hard, you just have to start applying certain habits to your financial life so that you can improve it. And trust me, this is something that you want to do. A 3.5% interest rate on your mortgage is much better than a 6% interest rate, and this can save you hundreds and hundreds of dollars each month just because of your credit score.
Read my article about how to increase your credit score if you are further interested.
Know how long you plan on staying.
If you plan on moving within the next year, then buying a house is probably not the best thing for you to do.
Usually it takes around 5 years or more for you to recoup the costs of buying, so moving right away means that you will be spending extra money that you do not need to spend.
Stick to your budget.
After you finally get approved for a mortgage, you should set a budget for yourself. I don’t care what the mortgage company gave you for your pre-approval number.
I want you to create a budget for a home on your home. Usually (almost ALWAYS), the mortgage companies create a pre-approval number that is much higher than what you can actually afford. I know someone who made $25,000 a year and was pre-approved for a $200,000 home. They had nothing saved either, so it was not like they were going to put a hefty down payment on their new home.
Look at the home multiple times before you make a contract.
Before you make a contract and find a home loan, you should look at the home multiple times. Check it out during the day, at night time, on the weekends and so on. You never know what the neighborhood can be like at different times of the day or week.
What do you wish you would have known when you bought your home?