Finally, the day has come when you and your family have decided to look for a new home. This doesn’t have to be a frustrating job that will end up with you having to settle for less than you wanted.
These 5 steps will help you to prepare for the purchase and make all the right calls.
1. Straight your credit up
The first thing you need to do is to get a copy of your credit report to see what your current status is. Lower mortgage rates are a direct consequence of a high credit score, and you’ll get there if you have paid off all your debts. And make sure you paid your creditors on time. What can also be useful is to lower the debt-to-income. In case you opt for closing some of your credit cards, leave the oldest one open, regardless of how often you use them. These couple of things will improve your score.
In case you don’t have any credit, then your credit card could help you identify your credit history. In this case, you should pay off the probably completely every month. This is where a loan can help you.
2. Get rid of all the debts
This is an important step that may not seem that important to you but it is what will significantly help your credit score. It also affects how much money you will get when you apply for a mortgage. Furthermore, getting rid of your debts means that you won’t have to worry about other expenses when you finally buy a home. Don’t think that settling the debt is better than paying it because settling will be visible on your credit report.
3. Monitor market trends
The moment you decide to look for a new home in the next year, start paying attention to the market conditions and demand. Concentrate on the area where you would want to live next with your family because it will help you find out what types of house are selling fast, what the offer is what you can expect once you start checking out specific properties.
It will also allow you to do proper research of the schools in the area for your kids, as well as facilities like parks and playgrounds. Even if you don’t plan to stay at that home permanently, you still need to understand that you will probably be there for the next five years, so you must make sure it suits your needs and preferences.
Your market research will also bring you another benefit. If you have the chance to talk to somebody who was in a similar situation as you, they will probably tell you something like “It was easier for me to decide when the right time to list my property for sale was because I knew what was in demand at that time.”
4. Start saving up for the down payment
Now is the right time to start saving up because you need to be sure you are able to save money and be in control of your finances. And it is also a good preparation for all the unexpected costs you will have once you buy a new home. The motivation behind saving up for the down payment as much as possible is that the larger your down payment is, the more you will be able to spend on your new property. It can also help you get your hands on a great property that may not seem affordable otherwise but becomes possible with a large down payment. So, don’t rush it and spend a year or more (depending on your situation) saving up money for the down payment and also for the extra money you will need to close the mortgage costs. There are many ways for a family to save money on monthly basis, so opt for a couple of them and start saving it.
5. Search for the right real estate agent for you
You can’t find the best possible home for you without a real estate agent. They are the ones who will do half the job instead of you. They are far more familiar with the area you are interested in. As well as that, they have access to homes that are not formally listed, which can give you an advantage. They also have negotiating skills that can help you end up paying less than you expected. Lastly, you don’t have to spend additional money on them because they get paid from the commission that comes from the seller, not you.
To make sure your family and you get the best possible home, dedicate a year to go through these 5 steps before you start searching for a new home actively. That way, you will save yourself a lot of headaches.