Although many of us aspire to leave rental life behind and graduate to homeownership, we simply don’t have the finances to make such a transition feasible. However, while it’s true that a home represents a massive investment, there are a number of steps aspiring homeowners can take to make buying a home more financially feasible.
So, if homeownership is a dream you wish to turn into a reality, put the following pointers into practice.
Rein in Credit Card Debt
When applying for a mortgage, you’ll want to do so with the bare minimum of credit card debt. Unsurprisingly, massive amounts of credit card debt often serve as red flags to lenders, who generally aren’t keen on granting mortgage loans to applicants who are unable to get a handle on their existing debt. So, if you currently have quite a bit of outstanding credit card debt, it’s in your best interest to rein it in before submitting any mortgage applications.
While this may mean placing homeownership on the backburner for a while, paying down credit card debt can dramatically increase your chances of loan approval. If you simply can’t wait to become a homeowner, consider asking a close friend or family member for a short-term loan to be used towards your credit card debt.
The less credit card debt you have, the lower your debt-to-income ratio will be, thus making lenders more likely to take a chance on you. Additionally, once your credit card debt has been massively paid down – or paid off entirely – give your credit score some time to recover before proceeding to submit mortgage applications.
Avoid Adding to Credit Card Debt
In addition to paying down existing credit card debt, make an effort to avoid adding to this debt while the application process is underway. Specifically, try to avoid making large purchases on credit while any mortgage applications you’ve submitted are being considered. So, outside of genuine emergencies, either hold off on large purchases you can’t afford to make in cash or request a loan from a friend or family member.
By the same token, try to avoid quitting your job during the application process. A lack of regular income is a huge red flag for many lenders, so unless you have another job with a similar salary lined up and confirmed start date lined up or are dealing with workplace abuse, try to stick it out.
Be Willing to Make a Large Down Payment
Although many of us seek to spend as little money as possible in every situation, such frugality may not serve you well when buying a home. While it’s understandable that you’d want to save money, making the largest possible down payment on a home can benefit you in two key ways.
For starters, a willingness to make a large down payment will show lenders that you’re serious about owning a home and have the capital to do so. Secondly, a large down payment stands to lessen the long-term financial burden synonymous with homeownership.
The larger the down payment, the lower your monthly payments are likely to be. An enormous down payment also decreases the outstanding balance of your home loan, thereby making it easier to pay off your mortgage in a timely manner.
Research Local Home Values
Given how expensive most homes are, it stands to reason that you’d want to get the best deal possible on your first abode. So, to avoid being taken advantage of, make a point of researching local home values after finding a house that strikes your interest.
Educating yourself on what similar homes in the area are selling for can give you a good sense of fair pricing and strengthen your position at the bargaining table. Homebuyers who are interested in picturesque Naples, Florida real estate would do well to research local home values before proceeding to make any offers.
For many of us, homes represent the largest purchases we’ll ever make. Additionally, with home prices spiking across the country, it’s easy to see why so many aspiring homeowners have placed buying on the home on the backburner.
However, while homebuying presents a number of challenges (especially at the present time), making your dream of homeownership a reality may be more feasible than you think. Aspiring homeowners looking to purchase homes sooner rather than later can benefit from the measures discussed above.