Thinking about buying your first home? Get set for an exhilarating adventure that can also seem a bit intimidating at times. It’s very easy to get caught up in a whirlwind of online research, open houses, and financing options. Take heart! A bit of financial homework early in the process will tell you where you stand. So roll up your sleeves and delve into these five action items. Amidst that whirlwind of activity, they will help keep your feet planted firmly on the ground!
1. Check your credit – As a first-time homebuyer, your credit score is a key factor when it comes to qualifying for a loan. It is important for you to know your score and understand how it affects the cost of a loan. Start by visiting AnnualCreditReport.com to get a free credit report from each of the three credit bureaus. Check them carefully for mistakes or anything that doesn’t seem accurate.
Keep in mind that building a strong credit rating involves more than just paying all of your monthly bills on time. Your credit utilization rate – the amount of credit you’re using relative to your credit limit – is also an important factor. Generally, a lower utilization rate contributes to a higher credit score. As a first-time homebuyer, it’s a good idea to minimize the amount of available credit that you have in use.
2. Evaluate your assets and liabilities – Take some time to learn about your monthly cash flow. Track your spending accurately for a few months to gain a clear understanding of how much you owe versus how much you bring in. This exercise will often provide a fresh perspective on your finances. You will find it helpful whether you are accustomed to having a surplus every […]