Everyone talks about preparing financially to purchase and own a home. However, it’s not always exactly clear how to prepare. Rather than get overwhelmed by details, there are some basic things you can start with in order to get your finances ready for home ownership. Here we will go over the best ways to prepare.
Unfortunately, there is no quick cure for a low credit score. It’s based on a lot of long-term factors like bill payment history and age of your credit accounts, so it’s difficult to boost your score short term. However, the more you prepare for buying a home, the better—and creating and maintaining good credit habits will help you in the long run. The first thing you can do is sign up for a free credit monitoring service so you are aware of your starting point. You can also identify any errors that might count against you so that you can dispute them. Some other things you can do are:
Hold off on opening any new credit cards or loans to avoid “hard inquiries” on your credit
Set up auto-payment with any recurring bills to avoid late payments
Don’t completely close any old accounts, even if you don’t use them anymore
These are just the basics and while they are general best practices, only consider them in your own credit situation. For detailed financial advice, always consult a professional.
The down payment on a new home is the largest upfront expense to prepare for. The size of the down payment will depend on the terms of the mortgage you choose, as well as the purchase price of the home. However, most experts recommend aiming for 20% of the price on the home. While the amount you need in the end might be lower, consider the advantages of saving more than not enough. Some simple strategies for saving up for this expense include automatic deposits into savings and redirecting funds you would normally contribute to a retirement fund. Everybody is different, and it’s important to consider the details of your particular financial situation. Hiring a financial advisor who can create a customized savings plan is a great idea for getting the most savings possible.
Among the myriad loan options available for homebuyers, there are some programs that exist specifically to help first-time homebuyers. There are various forms of financial assistance available, including special mortgages with low interest rates or tax credits. You can usually find these types of programs available through state governments. Take some time to research whether your state offers any financial help in buying your first home — it might surprise you how many opportunities are available.
The financial aspect of buying your first home is complicated and so is saving for it. However, if you follow these general best practices, you’ll be creating a solid foundation for yourself and your financial future.
Terese Ferrara is a long-time resident of the Bay Area and has been a partner with The Goss Real Estate Group for many years. She and her husband raised their two daughters in San Jose, where she successfully continues to build her real estate career.
After earning a bachelor’s degree from San Jose State University, she went on to teach in the San Jose Unified School District for 9 years. Transitioning to real estate was a logical choice, utilizing her patient demeanor to educate all levels of buyers and sellers. Knowledge and experience demonstrate her vested interest in delivering the highest level of care and professionalism to every client. She consistently strives to exceed her client’s expectations throughout the entire real estate transaction and remains a trusted advisor long after each close.
As a board member on KW Bay Area Estates’ Associate Leadership Council (ALC), she aids in support of culture and professional development strategies for over 180 associates. Terese is also a Director for the Santa Clara County Association of Realtors Foundation, which supports community service initiatives in Silicon Valley.
Terese is the consummate real estate professional dedicated to providing unparalleled service to her clients through ongoing training and education, keeping her on top of the dynamic market and latest real estate trends. Her high-touch approach coupled with honesty and integrity support her commitment to her client’s real estate needs.
