Buying a home is a huge investment, probably the most significant purchase of your life. It’s not something you should do without preparation.
Before you start on the road to homeownership, make sure you are ready.
6 simple steps to buying a house:
Step 1. Improve your credit score.
Step 2. Figure out what you can afford.
Step 3. Save for down payment, closing costs.
Step 4. Build a healthy savings account.
Step 5. Get preapproved for a mortgage.
Step 6. Buy a house you like.
Step 1. Improve your credit score
A high credit score snags you the best deals. “Below 660 or 680, you’re either going to have to pay sizable fees or a higher down payment,” says Barry Zigas, director of housing policy for the Consumer Federation of America.
A score of 700 to 720 will get you a good deal, and 750 and above will garner the best rates on the market.
Pull your credit reports and make sure you’re not penalized for old, paid or settled debts.
Get your credit report and score today with myBankrate.
Stop applying for new credit a year before you apply for a mortgage. Keep the moratorium in place until after you close on your home.
Step 2. Figure out what you can afford
There are various ways to determine how much house you can afford. If you’re using an FHA loan, your monthly payment can’t exceed 31 percent of your monthly income. The FHA will let you go higher under some circumstances.
For conventional loans…
By Dana Dratch | BankRate.com