Money Minutes | General Electric Credit Union Blog | Financial Resources

Do These 5 Things Now if You Want to Buy a Home in the Future

Nov 3, 2021 | 4 minute read

buying a home

Buying a home is a lot like camping (stick with us on this one). You must take time before your adventure to gather the tools, resources, and knowledge to survive comfortably. If you don’t, you could end up with a leaky tent. The housing market is no different – you should be prepared so, when the time comes, another player in the game doesn’t swoop in and get to your dream home first. From checking your credit score to brainstorming what you’re willing to spend, there are many ways to prepare now so you’re ready to buy in the future.

5 Tips That’ll Get You Ready to Buy a Home

1. Up Your Savings Game

It’s no secret that a house is a large purchase. The average down payment is 6.7%, though it’s wise to put down as much as you can afford while meeting the requirements of your loan program.1 A larger down payment will equal lower monthly payments, making homeownership more affordable in the long term.

2. Do a Credit Check

Your credit score is a significant factor in the quality of a home loan you can get. A poor credit score may leave you with a higher rate – and higher interest payments as a result – not to mention a less favorable loan term.

FREE eBook! Want to learn more about credit and its ability to open doors? Check out our complimentary eBook, The Ultimate Beginner’s Guide to Credit, available for print or download.

Check your credit a few months before you plan to get preapproved for a mortgage loan. This will give you time to make improvements as needed. Any of the following can boost your score over time:

  • Set up account alerts so you always know when credit card and loan payments are due. Payment history accounts for 35% of your credit score.2
  • Adjust spending habits. You should be able to comfortably pay off a credit card balance every month. If not, you may be overspending. Create a budget and identify spending categories you can work on.
  • Dispute errors. Mistakes happen – dispute errors on a credit report so the negative and inaccurate credit history can no longer affect your score. Access the eBook linked above and hop ahead to section 5 to learn how.
  • Watch usage. Keep your credit card usage to 30% of the card limits, even if a card is paid in full each month. If a card is maxed out or carries a high balance at billing, it could be reported because lenders will think you're dependent on the line of credit. 

3. Deal with Debt

Your debt to income (DTI) ratio is something lenders use to see how your monthly debt, such as student loans or credit card debt, compares to your gross monthly income. It’s essentially a risk assessment, as a ratio skewed by large amounts of debt may mean a borrower is less likely to make payments.

Look better in the eyes of lenders by whittling away at debt as much as possible before applying for a loan.

4. Plan Ahead

Don’t dive into the homebuying market without first nailing down how much you want to spend. If you do, you could end up viewing houses you later learn are not in your price range. See how much home you can afford by using online mortgage calculators and consulting with a mortgage loan officer.

You should also keep the costs associated with buying a home in mind. Appraisals, inspections, and closing costs are all items to keep on your radar while saving.

5. Find a Lender

You price shop for many things, why not a mortgage loan, too? Inquire about mortgage loans from different lenders to find the best option for you. Keep in mind that credit unions often have the best interests of their members in mind, which is why they typically offer better loan rates and terms than banks. Once you have a lender you want to work with, you can begin the preapproval process.

Ready to set out on a homebuying adventure? General Electric Credit Union (GECU) in Cincinnati, OH, is your go-to destination for loans, credit cards, checking and savings accounts, and much more! We’ll help you explore your mortgage loan options so you’ll feel set to buy a home when the time is right.

 

 

 

New call-to-action

 

 

 

Related posts:

 

 

 

1Homelight 8 Rules of Thumb to Determine How Much House You Can Afford

2Forbes Focus On Payment History—It’s The Most Important Credit Factor

 

Online Banking Login

Open An Account