Purchasing a home is a big move, so it’s important to have your finances in order before you put a down payment on a home and commit to a mortgage. Fortunately, there are a few things you can take to prepare yourself and get your fiscal health in order. If you’re thinking about buying a home, take these 7 financial steps first.
Financial Tips for Buying a Home
1. Choose a Location
Location has a lot to do with the prices of homes, so make sure you choose a location with price in mind. While you don’t want to buy a home in the worst neighborhood in town, you also don’t want to pay a fortune for a location that offers very few benefits to you and your family. Think about the city in which you live and what locations might suit your family the best.
2. Figure Out Your Budget
You don’t want to invest in a home you can’t afford long term, so make sure you figure out what you can afford before you actually buy a home. Even if you can come up with the down payment for an expensive home, high annual property taxes and monthly mortgage payments make owning that home unsustainable in the long run.
3. Improve Your Credit
Since buying a home means taking out a loan for most people, you’ll want to make sure you have good credit before you apply for a mortgage. You can get a free annual credit report to check your exact credit score, and you can use credit monitoring services to keep an eye on activity that could affect your account. With a little discipline, you can improve your credit in no time.
4. Compare Loan Options
Understanding your loan options is also important when buying a home. Most people opt for a traditional mortgage through their bank, but Tennessee VA loans from Griffin Funding offer a lower-cost way to buy a house. They also serve several other states, so make sure to check the area you plan to move to.
While these loans are only available to veterans and active duty service members, they have lower interest rates and often require no down payment, making them a better choice for those who are eligible.
5. Save Money
Owning a home is expensive, so start saving money as soon as you can. You never know when you’re going to have to pay for repairs or buy new furniture for your home, plus you have a monthly mortgage and annual property tax payment to worry about. If you need help keeping a track of spending and saving money, budgeting tools are a great solution.
Before making a decision where you want to move, it might be worthwhile to check this H&R Guide to property taxes by state to see whether you can really afford to live there.
6. Cut Monthly Expenses
If you’re like most people, you have a lot of monthly bills. The thing is, you might be able to reduce those bills and save money. Bundling similar services, cutting services you don’t need, and reducing subscriptions to fit your needs can save you a lot. You can even cut cable and invest in a streaming device for your home for long-term savings.
7. Don’t Forget Insurance
In addition to your mortgage payment, you’ll also have to pay for homeowners insurance each month. Don’t forget to add the cost of home insurance into your monthly expenses, and definitely don’t forget to purchase homeowners insurance. Not only are you required to have homeowners insurance while paying off a mortgage, but it can also save you a ton of money on fixing up your home.
Keeping your budget in mind, note that you can save by bundling insurance. Talk to your insurance agent about bundling your homeowner’s and car insurance in Florida or whichever state you’re going to reside in.