As a first-time homebuyer, you may find yourself asking, “what can I do to get a great deal on my first home?” Purchasing a home is a financial decision that can potentially affect your finances for years to a whole lifetime.
To make sure you get an affordable home matching your homebuying goals, it’s best to take a few key steps to give yourself the best advantage during the home purchasing process.
Pay off small debts
A great way to prepare financially before applying for a mortgage loan is to pay off any small debts you have to increase your credit score. Paying off debt at the current moment frees up some of your finances in the future, giving you more funds to work with while lowering your debt-to-income ratio, which can earn you brownie points with lenders.
A great end goal is to pay off your balance in full each month while avoiding interest and still earning rewards and building credit.
Refrain from opening up new credit accounts
If you intend to apply for a mortgage loan in the near future, it's best to avoid opening up new lines of credit accounts that can temporarily lower your score. If you need to open a new credit line to boost your score, then do so well in advance of applying for a mortgage.
Save for a home down payment
Saving money for a home down payment may seem taxing; however, it helps to be intentional with your savings. Start by opening a dedicated bank account and direct-depositing a portion of your income into the account each week or biweekly to continually grow your home purchasing funds.
To expedite your saving process, consider placing savings into a CD account or high-yield savings account. These give the highest earnings from interest out of any other form of savings. Kindly note, these saving methods do make it more difficult for you to pull money from the account to help users refrain from withdrawing money unnecessarily.
Figure out how much house you can afford
Before purchasing a property, you’ll need to find out what is a reasonable amount to spend on a home. To accomplish this, you’ll need to consider your monthly mortgage, recurring bills, taxes, insurance, and any other expenses affecting your finances. Leave yourself room for savings, emergencies and wiggle room for fun expenses.
With the aforementioned tips, you can prepare for homeownership like a pro, and ease some tension of the homebuying process.
About the Author
Kyung Kim
Hi, I'm Kyung Kim. I immigrated from South Korea to the United States in 1968 when I was 7 years old. I have seen my mom struggle with the English language and work hard to raise her four kids by herself. Still to this day, I don't know how she pulled it off, but she bought her first home in 1979 for $70,000 and because of that decision, she was able to live without worrying about her financial future. I want that for everyone, to feel the pride of home ownership and to build their financial wealth using real estate as part of their financial portfolio. I feel so blessed to play a small role in helping others reach this goal.
I live in Beaverton with my husband, Richard. My mom, who lived with us for several years, passed away in our home in February 2022. Her first home purchase in 1979 made it possible for her to live to the very end, without worrying about her finances. As of August 2022 with a little downpayment assistance, our four children own their own homes. Being in real estate, I quickly realized that if they didn't buy now, they may be priced out of the market in the future. Whether that would have been the case, we will never know, but what we do know is that they are all realizing some good, healthy appreciation in their home values.
As passionate as I am about people owning their homes, I'm also passionate about giving back to our community. I support Compassion First, a non-profit organization that provides aftercare for sex trafficked girls in Indonesia. My husband and I also feel called to financially support social injustice organizations.
I'd love to assist you. Whether you're in the research phase at the beginning of your real estate search or you know exactly what you're looking for, you'll benefit from having a real estate professional by your side. I'd be honored to put my real estate experience to work for you.
