February 20, 2015 2:00 am
“Buying your first home can be a complicated and intimidating process, both emotionally and financially,” said Steve Trumble, ACCC. “Buying a home is one of the largest investments consumers will ever make, and it’s critical that they prepare financially before they take the leap.”
The ACCC suggests the following:
Pay your bills on time – Your credit history plays an important role in the homebuying process. This includes rent and bills. If you have a history of paying credit cards, utilities, student loans and other bills late, it can damage your ability to secure a mortgage. Create a schedule and budget so that you can pay bills on time as they are due.
Pull your credit report – It’s critical that you know what your credit score is since it is one of the first and most important items a bank looks at when determining whether to grant a mortgage. When examining the report, make sure to look for inaccuracies or mistakes. If there are any, you’ll have to address that with the credit bureaus. If your score is lower than it should be, spend the time necessary to improve your score long before you are going to buy.
Trade lines – Most lenders prefer if you have three or more trade lines (credit cards, student loans, car loan, etc.) that have been open for at least a year. It’s also important to avoid closing these trade lines because it will negatively affect your credit score.
Save as much money as possible – A larger down payment (20 percent) or more can save you hundreds in additional insurances and give you more buying power.
Do your research – There are many other factors you have to consider when buying a home in addition to the purchase price of the house. Property taxes, homeowners insurance, utilities, maintenance, condo fees and repair can add up very quickly. Make sure to research interest rates to determine the best time to buy.
Published with permission from RISMedia.