Buying a home may be the largest, single purchase you will ever make. It doesn’t have to be scary or overwhelming. If purchasing a home is on your wish list for next year, here are some things you can do now to become a homeowner by next year.
Examine Your Credit Score
The loan rate and the amount of money that banks are willing to loan you are based on your credit score. Access your credit score for free with companies like Credit Karma. If your credit score is less than excellent start taking steps to improve it. Your credit score is one variable you can control and you don’t want it to drag you down in the loan approval process.
Investigate Various Types of Loan Programs
There are many loan programs available to first time home buyers depending on your personal situation. Whether you are a veteran, lower-income earner, or as described here, just your traditional first time home buyer, there are many programs out there that require you to put down every little to achieve your goal of home buying.
Develop Your Budget
Once you know how much money you will need for the down payment, consider other types of costs that you will incur during the home buying process such as closing costs, real estate agent fees, and moving expenses. All these are one time expenses but will be an important part of your home buying budgeting process.
Create a Dedicated Savings Account for Your Home Purchase
Putting aside money in an account that is dedicated to the sole purpose of buying a home will help you realize your goal. You can even nickname it “New Home” so that every time you see it, you will know exactly the purpose of the account. Set up automated deposits into the account every week, every other week or monthly, to help you achieve your goals.
Save Your Tax Refund
Many of us use our tax refunds to purchase big-ticket items that we have been waiting to get all year. This year, take that tax refund and put it right into your “New Home” account and watch it grow.
Save, Save, Save
Cannot emphasize the importance of examining your budget and cutting out unnecessary expenses like those early morning coffee runs and eating out during the workweek. Make it a habit to eat in more to help cut down on expenses and curtail spending on clothes and other non-essential purchases. Instead, when you feel like buying a coffee, make a $5 deposit into your “New Home” savings account.
Purchasing your first home is a big deal. Be sure to do your homework to find the best loan offers and purchase price but don’t forget that putting more money down now can help you save more money over the lifetime of the loan.