When considering buying a home, many look solely at the home price and what they think they’re comfortable paying each month. But there’s much more that should go into the decision.
Taking a look at your overall spending is a great place to start. The National Foundation for Credit Counseling offers a great Budget Worksheet to kick off the process. Once you see where your money is truly being spent, you have a greater feel for whether your money is going towards your wants or your needs. It also allows you to set financial goals – including homeownership – and work towards those goals in a responsible manner by putting all of your money to its best use.
Another piece of the financial puzzle when buying a home is getting prequalified for your loan. This is important whether you’re buying your first home or your 15th as it gives you an idea of what type of loan and what size loan you’ll be eligible for. While this can work in tandem with your budget and your idea of what you’re comfortable paying each month, it can also give you negotiating power when you find the house of your dreams! A word to the wise, though…No matter what your prequalification says you’re eligible for, stick to the amount you feel you can comfortably afford to avoid getting yourself into hot water.
Lastly, know your credit score. Credit plays an important part in getting prequalified for a loan and an even bigger part in actually getting the loan to go through. If there are any discrepancies or any outstanding lines of credit that are no longer being used, you’ll need to get those cleared up. And mind your payment due dates; continual late payments lead to a lower credit score which can mean a larger down payment, a higher interest rate or disqualification for the loan altogether.
Robin Husney, Your Charlotte NC Real Estate Specialist