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When planning to buy a house for the first time, there’s nothing more important than ensuring you’re properly prepared to make such a big financial commitment. You must be in a good economic position to secure a mortgage loan and successfully maintain what will likely be the most significant investment of your lifetime. As such, here are a few steps you should take before starting the house hunting process.

How to Make Sure You’re Financially Prepared to Buy a House

1. Determine How Much Home You Can Afford 

You must first determine how much home you can afford to purchase. Create a budget that includes a monthly mortgage payment that you feel comfortable making while still covering day-to-day living expenses, paying all your bills, and saving for other financial goals. You will also need to factor in closing costs, property taxes, home insurance, maintenance, and repairs.  

2. Check Your Credit Score 

buy a houseYour credit score will have a major impact on your ability to get a mortgage loan; thus, it’s wise to know where your credit stands before speaking with a lender. Low scores and evidence of credit fraud can halt a mortgage application before it ever gets anywhere. Becoming familiar with your credit situation early enough will give you the opportunity to boost your score and correct any errors that may show up on your report.

3. Pay Down Debt 

The less debt you have when trying to buy a house, the better. Lenders carefully review debt-to-income ratio as part of their mortgage approval process. This helps them understand how likely you are to remain in good standing with your loan. Paying down your debts will increase your chances of getting approved and allow you to obtain a better interest rate and save more money to put towards a down payment. 

4. Get Pre-Approved for a Mortgage Loan 

Acquiring pre-approval for a mortgage loan will give you more buying power when it comes time to make an offer. This will show sellers you’re serious about making a purchase and give you leverage during negotiations or in a bidding war. Getting pre-approved will also tell you the exact amount you have to spend on a home, so you can avoid looking at properties that are out of your price range. 

 

If your goal is to buy a house soon, it’s essential to begin getting your finances in order now. A real estate agent with Wright Real Estate can guide you in the right direction and provide invaluable insight into the home buying process. For more than 15 years, the Ronan-based company has provided high-quality real estate services throughout western Montana. You can rely on their vast knowledge of the local market for help finding a property that fits your needs and budget. Call (406) 676-8610 to set up an appointment, and visit their website to browse current listings.

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