Every potential home buyer comes to the real estate experience with varying degrees of understanding and financial stability. Before you begin your home search, you may or may not be pre-approved for a home loan. Your real estate agent and most loan officers will recommend that you get pre-approved to assist you in your finding the right home for several reasons. First, you will become knowledgeable about your current financial situation about what kind of mortgage will work best for you. In addition, you will find a realistic price range for your home search. Once you go through the pre-approval process, it is time to tighten the reins on your budget and begin practicing some important spending habits. The following tips are simple yet effective and will be put you on the path to a successful closing.
Avoiding Large Purchases
Be mindful of making large purchases around the time you go into contract on a home. While you may want to purchase a new car or boat to match that new dream home, it is better to fight the impulse and wait. In addition, buying furniture and accessories for your new living space is a task that is better suited for after the purchase of the home. The last time you need is to rack up expenses and spend money that could be better used for down payment or building up your savings.
Avoiding Large Spending
While everyone gets dozens of credit card applications in the mail each month, now is not the time to begin opening new accounts and racking up credit card debt. Buyers need to remember that this is the time where paying down your debt is the best course of action. Address or eliminate any collections against you, follow a frugal monthly budget, and maintain good credit scores by refraining from spending. All of these best practices will ensure you are on the right track to financial success and keep the loan process moving forward.
Since a large portion of the home buying process includes verifying financial information, it is vital to keep financial documents and affairs in order. Maintain bank accounts properly, avoid large money transfers, and pay bills and accounts on time to avoid unnecessary late fees. In addition, make sure you aren’t starting a new job or financial venture without letting your loan officer know. Banks are not apt to take risks on borrowers with inconsistent financial patterns. For now, keeping consistent habits can benefit you until you sign on the dotted line.
Becoming an Active Participant
Once the process is underway, be sure to respond in a timely fashion to requests from the bank and provide whatever documentation is needed. It is encouraged to ask questions as topics arise as well as keeping documents organized and accessible. By complying with document deadlines, you will be sure to keep the process moving along so that all parties can continue to work toward the common goal of getting to closing.
Becoming pre-approved is the first step of many in the home buying process. By tightening up your financial habits and following some best practices, you will alleviate some of the stress that can surround purchasing your next home.