March 29, 2022 · Real Estate
Consistency is key when you’re getting pre-approved to buy a new home. Keeping your finances in check can help avoid financing delays. It sounds simple, but things like staying in your current residence, sticking with your current job, and keeping your existing bank accounts all matter to the financing company.
Putting a check on your spending habits can also be a helpful way to make things run a little more smoothly. Since your credit plays such an outsized role when buying a home, it’s wise to hold off on applying for or opening a new credit card. You should also wait on making any big purchases that require financing (including new furniture).
Check your credit score well in advance of the time you’re going to apply for your loan. That way, if you find some items that need brushing up, such as a past due account, you can take care of them before applying for your loan. Improving your credit score can help you save thousands of dollars over the life of your loan.
Keep an eye out for things you might consider necessities or daily expenses that can affect your credit profile. Switching cell phone carriers or looking for a better rate on car insurance may be a smart financial move, but wait until after your home purchase. Even something as well-intentioned as joining a fitness club should be put on hold.
If you are buying a previously owned home, there are bound to be repairs needed. So, whether you’re a first-time buyer or you’ve purchased a home previously, go ahead and assume that all repair estimates are too low by about half…that way you can have a more realistic view of your budget.
Just because you’re pre-approved for an amount doesn’t mean you should spend the full amount. It doesn’t matter what type of home, you should always factor into your house-buying budget your current expenses, likely future expenses and lifestyle. Will you have to make big changes to afford the house you want, or can you maintain your current lifestyle?
It’s easy to get swept up by the process of finding your new home, but rather than get yourself into a bidding war with the competition, consider making a statement to stand out from the rest. Try writing a letter to the homeowner describing why the home is the perfect fit for you, including what you love about the home. Or find a common interest you have with the seller, like having a pet. You might be surprised by the reaction.