How To Prepare To Buy A House
Inflation has been a hot topic for some time now, but the way it has affected different markets is not always noticed. The housing market has been greatly affected by inflation and rising prices, and this can be devastating news for people looking to buy new homes. With just a little research, you can see that the average cost of a home has gone up nearly $100,000 dollars in the past three years! While that may seem ridiculous, there is still hope for the younger generation to buy their first home. The good news is that the housing market should be slowing down soon due to unaffordability and higher interest rates. The even better news is though it may take a little longer, you can afford to buy a home if you start being proactive now.
If you are looking to buy a home, whether in the near future or farther out, one of the most important things you can do is start building your credit. A high credit score can greatly help you get a mortgage as well as potentially lower your interest rate. Generally speaking, the higher your score the lower your interest rate. Since you will likely be paying your mortgage for quite some time (the average mortgage is 30 years), the lower your interest rate, the lower your monthly interest payment will be and your overall interest cost will be less. Building credit can seem complicated and daunting, but there are many ways to do it. Starting small by opening a credit card at your bank is a great way to build credit without having to do too much. If you want to learn more about other ways to build your credit, you can check out one of our previous blogs on credit here.
Another great way to prepare yourself to buy a home is saving. While it may be hard to save, and you may have to start small, saving money from every paycheck will help you make a down payment when you are ready to buy a home. Down payments are important because they allow you to save money by not having to pay interest on a loan, and lenders are more inclined to offer you a loan since you are less of a risk to them. Saving as much as you can every month will
add up and allow you to make a larger down payment when you are ready to purchase your first home.
The most important part of buying a home is waiting until you are ready. Homes are extremely expensive, and if you do not have a steady income or a large amount of money saved, buying a home can be a detrimental decision. A monthly mortgage payment typically varies between $1,700-2,500 which can be a very large part of your paycheck. This makes it very important that you ensure you have a steady income and job before you buy a home. Along with this, if you have a low credit score and cannot get a mortgage rate that you are comfortable with, waiting a little while longer while you build your credit is a good idea. While it may seem like waiting is the wrong thing to do, buying a home before you are financially ready potentially could be one of the worst decisions you could make for your financial future. Why? Because you may end up losing your home and all of the resources you spent to purchase it. So be patient, and take the right steps to prepare for one of the most significant purchases in your life.