Buying a home is one of the most common goals people set when a new year approaches. The buyers who reach that goal most smoothly are usually the ones who start preparing well before they tour their first house. If you are hoping to buy in the months ahead, here is how to use the time between now and then wisely.
Your credit score influences which loan programs you qualify for and how your loan is priced. Start by pulling your credit reports and reviewing them carefully for mistakes, such as accounts you do not recognize or late payments that were actually on time. Dispute any errors early, since corrections can take a while.
Then focus on habits that help over time:
You will need money for a down payment, closing costs and a cushion for moving and early repairs. How much depends on your loan. Conventional loans may allow as little as 3% down for eligible buyers, FHA loans require 3.5% down with a credit score of 580 or higher, and VA loans may need no down payment for eligible veterans and service members with full entitlement. Explore our low down payment options to see what might fit.
Open a separate savings account for your home fund and set up automatic transfers each payday. Year-end bonuses, tax refunds and gift funds from family can give your savings a boost.
Lenders compare your monthly debt payments with your income, known as your debt-to-income ratio. Paying down a car loan or credit card balance can improve that number and free up room in your budget for a mortgage.
Just as important is deciding what payment feels comfortable for you. Remember to account for property taxes, homeowners insurance, possible HOA dues, utilities and maintenance. Our mortgage calculator can help you estimate a full monthly payment at different price points.
A few months before you plan to start shopping, talk with a loan officer. They can review your finances, point out anything worth improving and tell you which programs may fit. When you are ready to tour homes, a pre-approval letter gives you a clear budget and shows sellers you are serious.
Once you are in the home-buying process, try not to make major financial changes. Avoid financing a new car or furniture, and talk with your loan officer before changing jobs or moving large amounts of money between accounts.
A little planning now can make the coming year the one you get your keys. First-time buyers can find more guidance on our first-time home buyer page, and FLO Mortgage is always happy to help. Reach out to our team to start building your plan.
A FLO Mortgage loan officer can walk through your options, run real numbers and help you choose a loan that fits.
This article is for general education and is not a commitment to lend. All loans are subject to credit approval, underwriting guidelines and program availability. FLO Mortgage, Company NMLS #1835856. Equal Housing Opportunity.
© FLO Mortgage, LLC. All rights reserved. Company NMLS #1835856.