Are you thinking about buying a new home in Lodi in 2017? If so, now is the perfect time to start preparing to make sure you’re ready for the house hunt in the new year. Here are some steps to follow as you make your preparations!
Step 1: Find out how much you can afford
Before you start setting up Pinterest boards of your dream kitchen or living room, find out just home much home you can comfortably afford. Check out a mortgage calculator to estimate how much you can afford. Mortgage lenders base your affordability on your gross monthly income, current debt and monthly expenses, credit score and down payment amount.
A standard rule for mortgage lenders to that your monthly housing payment (which includes principal, interest, taxes and insurance) should not exceed 28% of your before-tax income.
Step 2: Get your finances in order
Now that you have an idea of how much you can afford on your new home, time to roll up your sleeves and get to work on preparing your finances.
First step is to check your credit report. Take the time to review your credit report for any errors and address any discrepancies with the credit bureaus.
You’ll need a good credit score to secure a mortgage with a favorable interest rate. If you’re buying a home with your spouse or another co-buyer, it’s important to know that mortgage lenders will most likely consider both buyers’ credit scores. Take steps to improve your credit score by paying off debts and keeping your debt utilization ratios low. It can take at least six months to begin to see major changes in your credit score so be sure to start that process soon!
As you get closer to applying for a mortgage be sure you don’t make any significant changes in your credit history by closing older accounts or opening new lines of credit. Doing so may have a negative impact on the lender’s scoring systems.
In addition to getting your credit in order, take this time to save money for your down payment and other expenses (like closing costs or moving expenses). You may also want to research downpayment assistance programs as well. Take a look at your budget and find ways you can cut back in order to save, from simple solutions like bringing lunch instead of buying lunch each day or even cutting cable for more affordable entertainment options.
Step 3: Get pre-approved
Getting pre-approved before you start the house hunt can potentially save you from losing a home due to a denied loan application. Also, many real estate agents won’t work with buyers until they are pre-approved.
If you’re buying a new home from FCB Homes, be sure to get pre-approved through our preferred lender, Summit Funding.
Although it may sound like a lot of work, preparing for your homebuying journey today will make the process a lot smoother by the time you’re ready to start touring homes next year.
