Buying a Home? These Tips will make it Easier

by Justin Weinger on October 1, 2013

Even though it’s a bigger dream than ever before, home ownership is still a dream for many Americans. Indeed, it’s one of 3 top financial goals that most adults have. The biggest problem that most people face is not that they can’t buy a home but that they either try to buy one too early in their adult life or they do buy one but get in “over their heads” as far as mortgage, mortgage insurance and other associated costs to own a home are concerned.

To help avoid these problems we’ve brought you this blog today with advice, info and tips that will make your home buying experience easier. Enjoy.

  1. Increase your credit score before you buy. If you don’t have good credit or you haven’t built up your credit score yet, you will definitely pay more in interest on your mortgage than someone who does have excellent credit. The fact is, your credit score is much more than just a number and, for lenders, is a reflection of your spending habits. Any bank that you go to is going to look at your credit score very closely and, if they like what they see, it will be much easier for you to get a mortgage at a great rate.
  2. Don’t close any current loans before you make a home purchase. If you have loans that you’re paying on and you’ve been paying them on time with no problems or late payments, closing them just before you purchase a home may seem like a good idea but it’s actually not. The reason is that lenders will look at the lending activity that you have and, if you have none, may speculate that you won’t have the ability to pay back the loan they are about to give you. And if they do, you’re going to pay higher interest rates.
  3. Don’t take out any new loans within 1 to 2 years before you plan on purchasing a home. This is especially true if you already have established credit. If you’re contemplating making a purchase that’s a big enough to require a loan you should first consider if you truly need it and, if possible, pay cash for it. If you don’t, or you can’t, then you probably shouldn’t. (That Includes Small Business Loans and New Car Loans, among others.)
  4. Make sure you’ve had some cash in a savings account for several years. Lenders are going to look at your financial history when you ask them to give you a mortgage and, if they see that you haven’t had very much in savings over the last few years, they’ll be more hesitant to give you a mortgage and more than likely charge you more in interest. This is true even if you come to them with a decent down payment that was given to you by a family member, which won’t register as having been in your savings.
  5. Stay at the same job for a few years before you purchase. If you are planning on making a career change and you also plan on purchasing a home, it would be better to wait until after the home is purchased to make said change in your career. Banks like to see that you have a stable employment history and, if you don’t, the extra interest they’re going to charge you will probably negate any extra money you make at your new job.
  6. Stay at your current address for at least 2 years before you buy your new home. Just like a stable job history, lenders like to see that you have had a stable address and, if they don’t, they may think that you’ve had some hidden financial problems that have caused you to move around a lot.

The only real issue with following these 6 tips is the time issue that it takes to fulfill some of them. If you’re reading this article and you have the time to do it, wait until all 6 are covered to apply for your home mortgage and move into that dream house. If you do, you’ll be much better prepared to handle all of the new expenses that a new home brings and your interest rate will invariably be a good one because your financial history is good as well.


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