Even if you're in the early stages of the exciting home buying journey, or just starting to think about it, it's never too early to start preparing. Here are a few things to consider that will help you plan effectively for your future home and help you transform your dream of becoming a homeowner into reality:
1.) Check your Credit
Pull your credit reports from each of the three credit bureaus and be sure to check them for accuracy and dispute any errors that you find. Negative errors can decrease your score.
2.) Know Your Debt to Income Ratio:
Your debt-to-income ratio (DTI) is the percentage of your monthly gross income (pre-tax) that goes toward paying your monthly recurring debts. Add up your monthly bills (credit card payments, car loans, student loans, etc. ) and divide the total by your gross monthly income (which is your income before taxes). The percentage is your DTI.
3.) Determine a Budget:
A helpful guideline is the 28/36 rule - no more than 28% of your monthly income should go to housing costs, and total debt payments should not exceed 36% of your income. It's a good idea to put together a spreadsheet outlining your current and future expenses, including utilities, maintenance repairs, etc. From here, you can determine what you can afford to set aside for your housing expenses each month.
4.) Save for a Down Payment
Open a high-yield savings account and set up automatic monthly transfers to build your House Fund. Save tax refunds, bonuses, and gifts. Skip this year's vacation, and audit your monthly subscriptions to find even more ways to save.
5.) Find an Agent You Trust
Finding a real estate agent that you trust and enjoy working with is essential, and one of your most important decisions. Ask friends or family for referrals and interview a few realtors in order to find the one that will work best for you and your situation. You will be spending a lot of time with he agent you choose, so it is definitely important to work with someone you like.