According to statistics, the number of people purchasing homes has dropped significantly. There are many reasons for this drop. For one thing, people have trouble getting the money they need to put money down on a home. Another reason why it has dropped is that people aren’t sure how to purchase a home. Combine these two factors and you have more and more people settling with leasing rather than buying. When it comes down it, purchasing a home has many benefits – not only for the homeowner but also for the economy. The more homeowners there are, the healthier the economy. If you are thinking of purchasing a home, you want to be sure that you have all your ducks lined up in a row.
Here are five things you should do before buying a home.
Make sure that you are ready
Some people aren’t ready for the burden of homeownership. When it comes down to it, you not only need to have good credit, you also need to have a stable income. If you want to be able to pay your mortgage on time, you want to have at least a few months of savings in the bank.
Make sure that your credit is on point
If your credit is shot, you may have to spend some time building your credit. It is important to get pre-approved for a loan so that you can feel confident about your house search. Without getting pre-approved, you won’t really know what you can afford and it will be difficult to start putting offers down on homes. You can start building your credit by evaluating your credit score and determining where you need to improve. If there are errors on your report, you want to have them rectified, because a real estate agent will look the other way if they aren’t.
Make sure to get pre-approved
Once you have your credit settled, you can go to the bank and get pre-approved for a loan to purchase the home. Without this pre-approval, you won’t really know if you can afford to purchase a home. It may take a few different banks, or you may want to head to your local bank, but it will be critical to have that stamp of approval. With it, you will be able to narrow in on the home of your dreams.
Make sure that you have the money you need for a down payment
Typically you need somewhere around 20% of the offering price of the home. If you don’t have this cash available, you may want to spend some time saving up. It is will be critical to have this cash in liquid form, so that you can put the money into an escrow account to close the sale.
Make sure that you read about homeownership
It is not like renting a home. All the things you didn’t have to do when you leased your home, you will have to do when you own. For instance, you may have to replace the roof or perform other repairs, so it is important to have the cash for those upgrades. In the end, it costs money to own a home, but it will be more than worth it in the long run, especially when your home has accrued equity and value.