Buying your first home can be a big step. It is a daunting process for even the most confident and financially secure of people – credit scores, deposits, and mortgages can all play on your mind. Here, we will look at how to make sure that you are financially prepared to make one of the most significant purchases of your life.
Get out of Debt
Clearing any debts that you may have outstanding is one of the best ways of starting off homeownership on the right foot. Do everything you can to pay debts off, particularly credit card ones, will help your credit score to improve and give you a better chance of getting a mortgage.
It may seem like an unnecessary step, but paying off your debts means that you will not need to stress as much about finances when you do buy, and everything will be much easier.
Work on Your Credit Score
It is important to clean up your credit report as best as you can before you apply for a mortgage. You can start by requesting a copy of your credit report and your credit score to see your position. The higher your credit score means you will qualify for lower mortgage rates.
Be sure that you have paid off any debts that are past due or in collections. Then, concentrate on paying your creditors on time for the next year. This will help improve your score drastically. Lowering your debt-to-income ratio can help. If you do decide to close some credit cards, be sure to leave the oldest one open, even if you never use it.
If you do not have any credit at all, you may consider using a credit card to kick start your credit history. If you do this, then pay off the card in full each month. Any installment loans can help with this, such as a car loan. You may also be able to use your rental history to help establish your credit rating, so be sure that you are paying your rent on time each month.
Save up for a Deposit
Saving up for as big a deposit as possible can help you prove to yourself that you are ready to buy a home. It will also likely be a must for being accepted for Keith Davis Mortgages.
Remember, the larger your deposit, the more you will be able to spend on a home. A large deposit can make homes that may seem financially out of reach affordable since you are putting so much down to begin with when you make the purchase.
Keep an Eye on the Market
The property market can change on an almost day by day basis, so keep monitoring it. Pay attention to the market in the area that you are hoping to buy in. This will give you a better idea of what homes are selling for and what to expect when you start the process.
You should also research schools and other factors in certain areas. While you may not have children at the moment, you may in the future, so things like schools may matter more than you initially think.