If you’re thinking of buying a new home next year, now is the perfect time to start planning. There are several advantages to starting early, especially since it prepares you to jump on the perfect home when you find it.
Follow these steps to get yourself ready to buy a new home in the new year.
Check your credit report
If you haven’t checked your credit recently (don’t worry, checking your credit doesn’t affect your score) now is a good time to see where you stand. Request a report from each of the main three credit-reporting bureaus and make sure the information is correct. It can take several months to have an error removed so the earlier you start this process before applying for loans, the better!
Boost your credit score
Your credit score is an important three-digit number that can determine whether you’re eligible for a mortgage and the interest rate you’ll pay. A credit score of 680 is considered “good” so if your score is lower, use this time to boost your score.
Determine your budget
If you’re ready to meet with mortgage lenders, you can apply for a pre-approval to know exactly how much you’ll be eligible to borrow. If you’re not ready just yet, use an online mortgage calculator to estimate your affordability. Once you know how much you may be able to afford, you can estimate how much to save to cover your down payment and closing costs.
Make a list
Create a list of what you need and want in your new home. Think about what you don’t like in your current home and what options would make it better for you. Be sure to consider your lifestyle; if you work from home, you may want to have an office space or at least an extra bedroom to use as an office space. Love to entertain? An open-floor plan is a must. Ranking your wish list items will help identify your priorities and ensure your new home has what’s most important to you.
Research your options
Now it’s time to do some research. Start by researching potential neighborhoods, school districts, and available homes. Take note of home prices in these areas; it will give you an idea of what you can afford in your target areas. It’s also a good idea to start researching mortgage loans and home buyer programs you may be eligible for.
Hold off on large purchases
Avoid taking on large debts before buying a home. Large purchases can harm your chance to secure a mortgage, especially if they add to your debt-to-income ratio. Limit your spending in the months before you apply for a loan to improve your chances to securing financing at a favorable rate.
Buying a home takes preparation so the earlier you start the process, the better position you’ll be in when you’re ready to start looking at homes. When you are ready to buy, visit us online at LexingtonChicago.com to learn more about our outstanding communities throughout Chicagoland. We’re ready to welcome you to your dream home.
