· In: Family Finances
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After years of renting I’m finally ready to make homeownership a reality and prepare to buy a house. Before I wasn’t ready to permanently settle anywhere and I honestly wasn’t sure it was for me. But becoming a mother has made me realize the importance of ownership and having a place to call my own. I want to give my children that; a house, a home, and a life they can be proud of.
At the start of this journey I reflected and analyzed my financial habits. At first it was discouraging seeing the mistakes I had made in the past. But I was confident it would get better. Learning how to prepare to buy your first home may not be comfortable in the beginning, but creating a clear plan with actionable steps will help you get to where you need to be.
I’ve been working on my credit because I know that could cost me in the long run. A better credit score can save you thousands in interest on a mortgage loan. Having a good interest rate is important in obtaining the home you want for the price you want. Credit repair services like creditrepair.com offer free consultations to help you get started on your credit repair journey. I have some work to do before I reach my goal but I’m taking the steps to get where I need to be.
PREPARING TO BUY A HOUSE CHECKLIST AND FINANCIAL PLAN
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TIPS FOR HOW TO PREPARE TO BUY YOUR FIRST HOME
1. Commit to getting no new debt
Right now I am steadfast on the idea of taking on no new debt! No car, no credit card, nothing. I will live with what I have right now until I get my house. Taking on new debt is not a good idea when trying to obtain a mortgage because your debt to income ration is so important. That means you need to be making more money than you have in debt. If you continue to add debt essentially you need to be adding income as well. But discipline is everything. So commit to the process of getting mortgage ready.
2. Budget Ruthlessly
For a very long time I managed my money without a budget. I spent what I wanted, when I wanted and prayed the transaction went through. Thank goodness for growth. Now I have a budget. I plan for everything I want to buy. When getting ready to buy your first home it’s important to know exactly how much money you have coming in and how much you have going out. That means budgeting every bill, shopping trip, vacation and large purchase. Tracking your money will allow you to know exactly how much house you can afford when it’s time to make that decision.
3. Increase your Income
One thing I think we forget about when trying to big thing s financially is increasing our income! People are quick to give the advice to cut back but what about making more.
Anybody that knows me can tell you I am an advocate for multiple streams of income. I think sometime we hear that term and think it’s only for rich people. No it’s for smart people! Having more than one source of income allows you to do more and have more financial freedom.
Increasing your income is essential when preparing to buy a home. It will help to reduce your debt to income ration which in turn will help in the approval process. Supplement income will show a better ability to pay and is important in proving financial success and reaching your goal to buy a home.
Consider making more money by starting an online side hustle. Using the skills you currently have to bring in an extra $1,000 a month is totally doable. When I started, blogging is what did it for me but there are many ways this can be done. Do your research and come up with away that is ideal for you and your lifestyle.
4. Start saving now
I am excited about saving. My main goal is to save more than I spend. I cut back my spending and opt to put it into my savings. It’s so great to see that balance continue to go up. Saving money will help you be prepared for your down payment, closing cost, furniture, etc. You will want to have a nice stash of money to take care of all of the responsibility that comes with a new home.
5. Raise your credit score
I used to be reckless regarding my credit. I wasn’t taught the importance of maintaining it; to me it was just another number. Now I understand how important it is in experiencing the life I want. Anything that requires a loan, requires a good credit score. I have vowed to improve my relationship with my credit score and money in general so that I can not only live the life I want, but teach my kids as well. Your credit score is the most important part of getting yourself prepared financially to buy your first home.
6. Lower your existing Debt
This my friends is the one area I am working really hard on right now. Between credit cards, student loans and vehicle loans I have some work to do. But I am going to get there. First you need to pull your credit report and see exactly what outstanding debts you have. You can contact the creditor and make arrangements to get those debts taken care of. Sometimes they will even negotiate and allow you to pay a lower amount than you owe. Lowering your debt will help you get to home ownership faster.
7. Research home buyer assistance programs
There are several cities and states that offer first time home buyer programs. These programs help you in the process of buying your first house. They connect you with different people that can help you in the process like realtors, inspectors and even mortgage brokers. Often times they will help you with obtaining a low-interest-rate mortgage, down payment assistance and closing cost assistance.
The US Department of Housing and Urban Development (HUD) has a great list of resources to help.
OTHER HOME BUYING POSTS
How to Buy a Home as a Single Mom
10 Ways to Reduce your Household Expenses
How to Create a Budget that Works to Reach your Financial Goals15 Side Hustle Ideas for Moms
Are you ready to buy your first home? Is your credit score good enough to get the interest rate you need? Have you saved enough to move forward? Tell me about your home buying journey!
