2020 is certain to be a promising year for those who desire to purchase a home. The housing market is currently generous for buyers, providing lower than normal mortgage rates and promising prices. However, it is important to have your finances organized and be fully prepared for the closing costs before purchasing in 2020.
Financial tips for buying a home
There are certain things every prospective home buyer can do to ensure they are in a good financial position when they purchase their home. The following are four important financial tips as you prepare to purchase a home in 2020.
Determine your earnings
The first step in organizing your finances is to determine how much you (and your spouse) bring in each month, which is an essential component in determining how much you can afford to spend on a home and how much you can receive for a loan. Your earnings also affect the amount you can spend on other areas of your life and still save enough for the down payment and other costs required upfront when buying a home.
Create a realistic budget
Once you establish how much you and those who plan to purchase the home with you (spouse, parent, etc.) make each month, the next step to take is to create a realistic budget. The best way to do this is to make a list of your expenses, making note of which ones are necessary and which ones are not necessary. If the expenses each month is greater or does not allow for proper savings, then eliminating unnecessary monthly costs from the budget may be required.
Create a savings account
When crafting your budget, it is essential to set aside a savings cost each month. Purchasing a home is a significant investment that requires an upfront down payment of approximately ten percent of the cost of the home. In addition to simply setting aside money each month, it is best to create a separate savings account. Many are tempted to spend the savings if it is in their checking account, whereas setting aside a separate saving that is off-limits is much easier.
Understand your credit
Credit is an important part of purchasing a home, and it is important to get your credit score as high as possible. To do so, it is first important to understand where your credit score currently is, along with the factors that might be pulling credit score down. One of the biggest issues for those who have low credit is debt, and it is recommended to pay off as many debts as possible before purchasing your home in 2020. By doing so, you put yourself in a better position to make all monthly mortgage payments long-term.
The bottom line
By taking the time to create a realistic budget that provides an additional amount each month that goes towards savings, you can put yourself in a better financial position to purchase a home in 2020.
EXIT Realty Bob Lamb & Associates is Murfreesboro’s most innovative real estate team.
EXIT Realty Bob Lamb & Associates
2630 Memorial Blvd, Murfreesboro, TN 37129