Prepare to Become a Homeowner

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( — November 21, 2016) — Do you have dreams of moving out of your dingy apartment and purchasing your first home within the next couple of years? Well, you need a plan. Depending on your current financial situation, it could take months for you to arrive in a position where your dream could actually become a reality.

Four Ways to Prepare

Until you’re actually considering the possibility of buying a home, you don’t realize how much actually goes into the process. Here are some financial and practical tips for getting your ducks in a row.

1.      Repair Bad Credit

Your credit score will play a major determining factor in getting pre-approved for a home loan. So, if you have a bad credit score, now’s the time to take action and begin repairing it.

“If you feel that you’re in over your head or would like some ways to potentially reduce your total debt, you may want to seek assistance from organizations that help people rebuild their credit,” Credit Repair Services suggests. “These services can do a variety of things to help you improve your credit rating.”

It can take months – even years – to repair bad credit, so don’t expect this to be a quick fix. By addressing underlying problems now, you’ll give yourself time to recover.

 2.      Set a Budget

If you don’t already have a budget for your family, now’s the time to develop one. The logic for developing a budget now is two-fold:

  • First off, by developing a budget, you’re able to see exactly how much money is coming in and where it’s going out. This allows you to eliminate unnecessary expenses and save money when possible.
  • Secondly, when applying for a home loan, you’re going to have to answer a bunch of questions about your finances. Some lenders may even ask for a basic budget. Having this information consolidated into a single spreadsheet shows that you’re responsible.

It’s virtually impossible to be financially healthy without some semblance of a budget. Set your budget today and begin preparing for tomorrow.

 3.      Find Ways to Save

Once you have a concrete budget established, you can start to identify areas where you can save. Even if you’re only able to set aside $50 per month, that’s a start. By the end of the year, you’ll have $600 that can be applied towards a down payment. Eventually, you may get to a point where you’re able to set aside several hundred dollars per month.

 4.      Learn Basic Handyman Skills

Now that we’ve discussed some financial tips, let’s think about a practical suggestion. While you may not need handyman skills when living in a rental property, you’re going to need to know how to do certain things when it comes to owning a home. Take some time to acquire some knowledge and skills so that you’re prepared when this time comes.

Don’t Procrastinate Any Longer

It’s easy to talk yourself into renting. You don’t have to worry about making expensive repairs. You can avoid the expense of moving. It’s just comfortable.

But the longer you procrastinate and avoid buying a house, the more money you’re losing. You’re throwing money down the drain, as opposed to building equity. You’re also missing out on record-low interest rates, which could save you tens of thousands of dollars over the life of a loan.

The prospect of buying your first home can be scary, both financially and practically. But the truth is that you’ll be glad you did. Start preparing now so that everything is in order by the time you’re ready to put in an offer.