First off, Congratulations! Buying a home, whether its your first or tenth, is one of the biggest financial decisions you’ll ever make. No more landlords, no more rent and hello tax deductions, equity and pride of ownership! Now, before you start looking at homes, there are a few items you need to do FIRST so that you are ready and able to submit those offers.
Assess Your Finances
Before you do anything, make sure you know what you can afford and how you spend your money. You might also need to budget for that down payment. One thing that I do personally to manage my finances is through an app. I use Mint (mint.com) to track my income and daily expenses and balances. You can see categorize your spending and then visualize in a simple chart. Now you know where your money goes without any month-end surprises.
You might also want to take a look at your monthly obligations and see where you can trim the fat. Do you really need your cable tv and land line? Can you replace your DVR with a Roku and a Hulu subscription? Do you have high interest rates on your credit cards? Might be a good time to consolidate any revolving debt into a 0% interest credit card. Several cards have no-interest for 12-18 months. Great idea to really tackle any debt you may be having.
Manage Your Credit
What is on your credit? If you are like me and you don’t like any credit surprises, I strongly strongly suggest signing up for credit monitoring. For $20 or less a month, you can see unlimited credit reports and get live alerts when your credit is checked, when balances reach a limit or if any other changes pop up. Now you don’t see your scores without paying more money, but my advise is to not worry about the scores. Most important is make sure your balances are low and you pay your bills on time. Each credit bureau has a service as does MyFico.com. I personally use TrueCredit.com, only because I have been with them for awhile and I am used to it.
Once your finances and credit are in order, you can apply for a mortgage. From my opinion, applying for a mortgage BEFORE you even look at homes is the best decision you can make. If you present a seller an actual underwritten and fully approved mortgage along with your offer, you are one step ahead of the game.
Some lenders will offer various stages of ‘approvals’ for buyers, but only a fully underwritten approval holds its weight.
Apply now today to start your path towards home ownership!