Getting Financially Prepared: 6 Things To Do Before Buying a Home

Buying a home is exciting, and being prepared for it can make the experience even better. Before deciding to buy, make sure you're ready financially. Preparation can mean the difference between getting a good deal on a great place and losing out on something that would have been perfect. It's not always that dramatic, but when finances are in order, it's much easier to be more confident about moving through the home buying process. Before buying a home, focus on doing these six things:

Get That Credit Report In Order

Checking your credit report is very important. Many home buyers have been derailed by a bad credit report that they weren't aware of. There can be errors on these reports, and there can also be legitimate problems that a buyer might not have known were there or might have forgotten about. Taking a careful look at the report is a great way to avoid nasty surprises when applying for a mortgage.

Have a Reasonable Level of Savings

Extra expenses are going to come up in the home buying process, and one of the best ways to avoid not having money for those expenses is to have a savings account before buying a house. Even a few thousand dollars can go a long way toward getting things fixed, and can keep a new home buyer from needing to use credit cards or borrow from friends or family members. The size of the savings account should be based on the price of the home, the home inspection results, and other factors. Every situation is different.

Check With Lenders, and Get Pre-Approved

A pre-approval is the best thing a buyer can do. That shows them what they can safely borrow, so they can look for homes in their price range. Falling in love with a home that's not affordable can be very frustrating, and it's also upsetting for the seller when the offer falls through because the buyer can't get financed for that amount. Sellers will take an offer more seriously if the buyer has a pre-approval letter, and some real estate agents are very hesitant to submit an offer without one.

Know What's Actually Affordable

No matter what the bank says can be borrowed, all buyers should know that they don't have to spend that much. If you're not comfortable borrowing as much as the bank will loan you, choose a home that costs less to provide more peace of mind. That can mean a smaller mortgage payment, lower taxes, and plenty of other financial benefits that are worth considering.

Don't Open or Close Any Lines of Credit

Once you've checked your credit report and gotten pre-approved, don't touch any credit. Opening new lines of credit or closing old ones can affect your credit score, and that could be enough to disqualify you from the home you're trying to buy. It can also slow down the process as the lender works to re-evaluate you, so it's important that you leave things the way they are until after closing has been completed.

Avoid Doing Anything Funny With the Money

Just like with your credit, moving a lot of money around can seem suspect. Don't move large sums from one account to the other, spend big sums, or make large deposits that are out of the ordinary for you. The more simplified everything is, the easier it will be for the bank to make a decision as to whether a particular home can be purchased. That way you'll lower your risk of refusal when it comes to getting the home you really want.