Buying a house puts valuable equity within your reach. It gives you the authority to decorate, structure and design a property to your liking. Little beats the freedom and power that you will feel after you pay your house off and become the sole owner of a unique property that may be valued at several hundred thousand dollars or more. But, getting approved for a mortgage doesn’t just happen.
Proactive steps to first time homeowner savings
The best time to start saving money on your first home is before you start home shopping. If you immediately thought about your credit rating and the importance of going into the home buying process with a strong credit rating, you’re on the right track. Keep reading, to learn practical steps that you could take to improve your credit rating.
Also know that there are other important steps to take to save money on your first home. These steps will also help you to save even if you’re not a first time homeowner. Top of these steps is financing. Getting pre-approved for a home loan from a reputable lender can give you valuable price leverage.
Pre-approval for a home loan alerts your realtor to how much mortgage you can afford to take on. To save on a house, avoid shopping for houses that are priced at the maximum of your home loan approval rate. See pre-approval when interest rates are low. Items that you need for pre-approval include pay stubs, income tax returns, current loan amounts and your credit score.
More ways to save money on your first home
Shopping for a home loan with your local bank could net you lower mortgage interest rates. This can be particularly helpful if your income is directly deposited into your account and if you have several thousand dollars of savings in your bank account. If you know that you want to buy a house a year from now, start working on your credit score now. Also, start building your bank account savings.
Another way to save money on your first home is to work with a real estate agent who takes a good credit score seriously, a realtor who won’t tempt you to take on more house than you can afford right now.
To improve your credit rating, pay down high interest loans. Also, pay down or, better yet, pay off high interest credit cards. If you have accounts in default, also pay these off or, at the least, pay the accounts up so that they are current.
Take charge of the home loan process
Millions of Americans apply for a home mortgage each year. Not everyone is approved. This is a time when being proactive can help you fulfill a dream. Paying off debts and getting caught up in late payments help to improve your credit which, in turn, improves your chances of securing a home mortgage. Getting an okay from a lender is another huge step forward.
Connecting with a mortgage lender before you start home shopping not only gives you money to work with, it is a great way to know what areas you need to work on to increase the amount of money that a lender will loan you. Additionally, if you aren’t pre-approved for a home loan, you can find out why you weren’t approved and take steps to correct these weak spots.