Although homeownership is considered by many to be a major component of the American Dream, all too often, we witness that many people are not sufficiently prepared and/or ready to prepare – from a financial perspective! When you identify how homeownership might meet your needs and aspirations, and ensure that your choice is the best one for you, to ensure that the process from searching to closing on a home is as stress free, as possible! Since, for most of us, the equity in our home represents our single largest financial asset, wouldn’t it make sense to proceed wisely? With that in mind, this article will attempt to briefly consider, examine, review, and discuss 6 steps that could help you prepare for many of the financial considerations involved, from buying a home to home ownership, one.

one. Do not add more debt/credit: If you really want to own a home, in the lead up to looking/seeking, make sure you avoid taking on any more debt and instead try to pay off all debt. , you currently have. Your overall credit is key in determining whether you qualify for a mortgage, and if you do, whether you’ll qualify for the best possible rate. Evaluate your credit report, correct any errors immediately, and address any weaknesses. Do it yourself or hire a professional to better position you in this area!

2. Pay existing debt: Mortgage lenders/home financers use various ratios to determine their decisions as to whom to lend funds to! They consider one of these significant factors to be the percentage of one’s total debt relative to their income. To prepare, use the lead up to your search to pay off this debt!

3. Review credit report: Take your credit and credit history seriously! Before you begin, obtain a copy of your report and review it carefully for any errors, mistakes, or issues that require explanation. Either go through the process yourself, to fix them, or use a professional, to make sure you are best positioned. Take a look at your FICO score, know what it takes, and strive to improve!

Four. Build/accumulate the necessary funds, necessary to initial payment: Although, in most cases, it might require 20% initial payment, To qualify for a home loan, there are, today, certain loans that require less. However, when you deposit less, you will have to pay more each month and it can be more difficult to qualify! Take the time, between when you make the decision, to search and when you find the right home, for you and your needs, to save as much money, so you’re all set and prepared!

5. Prepare for contingencies/Reserves of 3 to 6 months: When you buy a house, there are often a lot of unexpected expenses, etc. It is wise to prepare for contingencies and create various financial reserves, including for repairs, renovations, appliance repair, major components, and unforeseen interruptions in employment. Three to six months worth of money should be reserved for these considerations!

6. Bookings: When you have all the reserves you need, you significantly reduce your potential, stress and unnecessary stress!

Congratulations on making the decision to buy a home. Now, proceed, wisely!