5 Financial Tips For Buying A House

If you want to purchase a house soon, you need to make sure that your financial house is in order before you begin the house buying process. You want to make sure that you have everything lined up financially so that when you find the house that you want to purchase, the process will go smoothly.

Check Your Credit

The first thing you need to do is check your credit, because that is exactly what the bank is going to do when you apply for your loan. Nothing on your credit report should be a surprise to you. You should know all the information that is on your credit report. If there is anything that you don't expect or don't understand, now is the time to figure it out.

Looking at your credit report will allow you to figure out where your credit rating stands and the steps you can take to lower your credit score. Generally, reduce your overall debit load and staying current on your payments are the best steps you can take to raise your credit score.

Stop New Credit Activity

Second, you don't want to engage in any new credit activity when you know that you will be looking for a home soon. That means you don't want to open a new credit card account, take out any new loans or do anything else that will generate a hit on your credit card during this time period.

Figure Out Down Payment Amount

Third, you are going to want to figure out how much you need to save for a down payment. There are lots of loan programs that can allow you to put down a smaller down payment, such as Federal Housing Administration loans and many states have first-time homebuyer programs.

Do some research on the type of loans that you qualify for so that you know how much you need to save up for a down payment.

Save Extra Money

When you purchase a home, you need cash for more than the down payment. You don't want to dedicate all of your cash to your down payment. You are going to need to save some cash for the closing costs, which are going to equal a small percentage of your loan. You can talk to your real estate agent to find out the average cost for closing in your area. Closing costs usually include such expenses as home inspections, title searches and homeowner's insurance.

You are also going to want to save money for the move itself. You will need to purchase packing supplies, as well rent a van or truck and pay movers. You are also going to want to save some money for items you'll need for the house. Even with a turn-key single family home, you may want to paint some rooms, purchase light bulbs, or you may need new furniture for the space.

If you want to purchase a house soon, you need to become familiar with your credit report, take steps to increase your credit score if necessary, save a down payment, and save extra money for the additional costs you'll face when you purchase a home.