You’ve done it! You are buying a new home. It’s the American Dream – having a place to call home, a place to keep your most prized possessions. Buying your very first home is an exciting time and as you know it doesn’t just happen overnight. The homebuying process may start at least a year in advance, usually the first time you catch sight of a place that you can imagine yourself and your family living in. This is then followed by months of scrutiny on various styles of architecture, sizes of yards and qualities of school zones. Soon enough, you zone in on the perfect neighborhood, with the perfect home for you and your family. Then, comes the financial process, here are some financial tips and hacks for first time home buyers.
1. Get your financial home in order, the sooner the better. This will help you (and your potential lenders) know exactly how much home you can comfortably afford. Prepare a Net Worth Statement – a comprehensive report listing all your assets and debts. This will show you not only how much you can afford to put down, but equally importantly how much you can afford to pay each month.
2. Establish a monthly budget – a comprehensive report listing in precise detail all your current monthly expenses (credit cards, utilities, gas, food, etc.) Leave nothing out and label the first column “before.” Then in a second column list new or increased expenses, for example: your electric bill will likely be higher, and you should add things like property tax, utilities, homeowner fees, lawn care, maintenance, pest control, and other new needs and wants.
3. Know your credit score, because that’s how potential lenders are evaluating your creditworthiness. Potential lenders are looking for confirmation of your steady income, that you have the cash reserves for a down payment and that you have a good credit history. Start right away by pulling your FREE CREDIT REPORT from the major credit agencies (Equifax, TransUnion, and Experian) and by identifying and updating any items listed incorrectly. Work with the credit agencies as well as the vendor in dispute to resolve each issue. And at least for the year or so that you are in the process of buying a home, consider one of the paid credit monitoring services to keep an even closer look.
• Credit Karma
• Identity Guard
4. Be realistic with your expenses and plan for your future. Remember the commitment you are making with your new home loan is typically 20 to 30 years. So, spend careful time identifying your long-term goals such as travel, education, and retirement. Have a solid 20-year financial plan illustrating where you are, where you want to go and how you will get there. Check out the many reputable online resources for free financial advice, such as NerdWallet.
Whether you are just beginning your new home financing process, or you are closing tomorrow – stay on top of your financials to ensure security and happiness for you and your family for years to come. Stay tuned to Lennar’s Open Door Blog for more apps and hacks that will simplify your homeownership experience.