With the rising prices in the housing market skyrocketing over the last couple of years, potential homeowners have often lost hope in achieving their goals. If that includes you, don't give up now. Financial indicators point to the very real possibility of significant price drops in 2023, once again opening the door to your home purchase. Our real estate agents want to help you make sure your finances are in order by sharing these five focal points for your consideration.
- Safeguard Your Savings
Now is not the time for extravagant purchases. Your available cash must be sufficient to cover the down payment, pay for inspections and closing costs, and cover moving expenses. Remember, the higher the down payment, the lower the amount you will be required to finance and, subsequently, the lower your monthly payment.
- Clean Up Your Credit Report
While credit cards often provide a monthly score to their holders, most Americans are in the dark about how the process works, the errors that can damage their credit score, and how they can repair it. A credit report is a guide to lenders as to the creditworthiness of the borrower. It records the individual's debt and payment status and history. From those facts, the reporting bureau assigns a score. If those facts are incorrect, the impact on the score can be negatively affected without merit.
For this reason, the Federal Government passed the Fair Credit Reporting Act in 1970. It guarantees the creditor a free report from each bureau once a year via the website Annualcreditreport.com. This is the only authorized website, although plenty of pretenders can recommend actions that will damage your credit. Don't fall for their offers to clean up your score quickly. If you need assistance understanding the report, contact a credit counseling agency approved by the Department of Justice, which will provide free counseling, including specialized programs for first-time homebuyers.
- Increase Your Credit Score
In addition to correcting erroneous information on your credit report, you must also address the financial habits that affect your creditworthiness. Pay all of your bills on time, every time. A forgotten purchase on a seldom-used card can make your score plummet. You can avoid the issue by setting up each card to draw a minimum payment each month. Your bank won't forget to make your payment even if you do.
- Lower Your Debt Level
Following your payment history, your debt load is the next greatest factor in determining your credit score. A healthy debt-to-income ratio is 15% or less, while 20% or higher is considered a red flag to creditors. The only ways to reduce your debt load are to pay down your current obligations and avoid incurring any more. It may be tempting to use a credit card to avoid dipping into your savings. But when you're planning a home purchase, the debt load is critical to the viability of the loan. Use cash when you must and avoid the purchase when you can. Put off large purchases such as new vehicles or furniture until after you buy your home.
- Seek Loan Preapproval
Before you shop for North Canton homes for sale or Akron homes for sale, shop for a lender. By doing so, you will learn how much you can spend on a house and how much you will need for a down payment. Compare rates and terms to find the best deal for you.
Whether you're at the beginning of the process or ready to buy, contact us to help you with your next steps toward homeownership.