So you have decided to buy or sell a home. You’ve been searching online for the perfect new home for you and your family, but are you financially ready? Are your finances in a good place for such a big move? Whether you are buying or selling, there are important steps that you need to take to make sure you’re fiscally fit.
Before you start shopping for your fabulous new home, take steps to get your finances in order. Here is a quick guide for buyers and sellers about what it takes to get financially ready so you can move forward in the process.
If you are thinking about buying a house, getting your finances in order should be at the top of your checklist. Long before you start looking for houses, ideally years before, you need to start improving your credit score. Although standards fluctuate, if you want to get a good rate, your credit score should be at least 720. Spend a few years:
• Paying off debts
• Updating your credit report
• Making payments on time
• Increasing your income
• Building up savings for the down payment
Once your finances are in better shape, it’s time to get organized for a home purchase. This involves choosing a loan type, shopping for a loan, and getting a pre-approval letter from your lender. Your bank will base your qualifications on a number of criteria. Some of the financial paperwork you will need to show your lender includes:
• Proof of income
• Amount of savings
• Assets or collateral
• Employment verification
• Credit report