Buying a home isn’t as easy now as it has been for the past 10-15 years. Thanks to the crash of the subprime lending market, standards have tightened. However, it is important to note that preparing to buy a house has always carried with it the need for preparation. From the down payment to getting the financial information together to actually determining whether you can afford a house payment, preparing for a home mortgage is the way to go.
Here are some things you should do in order to get yourself in order for a home mortgage:
- Start saving money for a down payment: cut back on nonessentials, put money into a high yield savings account
- Review your credit score
- Begin gathering financial information, such as profit and loss statements, tax returns from the past two years, bank account statements and pay stubs
- Do a debt analysis and decide how you can reduce your debt while still setting money aside
Anymore, it is a good idea to make sure that you are financially able to take on the responsibilities of home ownership. It is important to realize that there are many costs to home ownership that you may not consider right now. Financial planning should precede the decision to buy a home. If you can take 4-8 months (or even a year!) to organize your finances and prepare a plan for affording a home, you will find that you will be able to better afford a home, and get a better mortgage loan.