Buying a new home is a huge financial commitment. Both the purchase and the ongoing expenses of a house can quickly eat into your finances, so before you take the leap into looking at property, you should make sure you’re adequately prepared.
Here are some tips for preparing your finances before the big move:
Analyze Your Savings
Before moving house, your emergency savings account should have at least three to six months’ worth of living expenses in it. This can help cover long-term costs such as the mortgage, to short-term costs like the deposit, down payment and closing cost.
The down payment can cost typically between 3.5% and 20% of the purchase price, while closing costs may run up to 2%-3% of your loan amount.
Consider Your Monthly Income
The monthly income of yourself and your partner should determine how much you can afford to pay on your mortgage, therefore what kind of properties you should be looking at.
A higher monthly income can secure you a property of a higher value.
Get A Good Mortgage Deal
Fixed-rate mortgages remain at the same interest rate throughout and are the most common type of mortgage. Adjusted rate home loans can vary in interest rate depending on the current market. ARMs are another type of adjustable rate mortgage, which start at a low rate before increasing as the years go on.
Mortgage lenders will often charge fees for documentation preparation, checking your credit and appraising the home- and these won’t necessarily be reflected in the interest rate.
Compare mortgages online regularly, and make sure you find a mortgage lender who can offer you a flexible rate for your property, like The Home Loan Expert. They can help if you’re looking for a reliable mortgage lender for your home loan, simply visit their website at: https://thehomeloanexpert.com/.
When you’re considering your mortgage, remember to secure homeowners insurance for your property as well.
Look At Your Spending
Before you begin the process of getting a mortgage pre-approval for your new home you should understand your income and expenses. Any monthly spending habits and recurring expenses should be accounted for. This is so you’re aware of what you’ll have left to spend on the mortgage. Expenses can include student loans, subscription payments, grocery shopping, money spent on children, car maintenance and retirement savings.
Check Your Credit
A good credit scor and a history of paying your bills on time is essential in order to qualify for a reasonable loan. To boost your credit score, consider registering to vote, getting a credit card, keeping up with any payments on finance, and staying away from payday loans.
For low credit scores that won’t budge, check any old accounts for incorrect addresses. The wrong personal information can also have an effect on your overall credit score.
Prepare Any Supporting Documents
Documents like bank statements, pay stubs, W-2s, bank statements, and tax returns are all needed to verify your finances on the mortgage application. Make sure it’s all in order so you have it ready when needed.
Veeramachineni Lalitha
I am Finance Content Writer. I write Personal Finance, banking, investment, and insurance related content for top clients including Kotak Mahindra Bank, Edelweiss, ICICI BANK and IDFC FIRST Bank. My experience details : Linkedin