Becoming a homeowner is considered the ultimate American dream for most people. Unfortunately, many buyers rush into the process before they’re financially ready. Before you sign any papers, you should be fully prepared for the expenses associated with buying a home. The following guide will explain the steps you need to take to get your finances in order. 

A Financial Guide for Buying a Home 

1. Start Saving for the Down Payment 

When you’re buying a house, you should have as large a down payment as possible. The standard for most mortgage loans is 20%, but the more you’re able to put down, the lower your interest rate will be. You’ll also be able to avoid the additional monthly expense of private mortgage insurance. 

You can start setting money aside by creating a budget, cutting out unnecessary costs, putting away extra funds you receive, and setting up automated savings with your bank. Adopting these saving techniques will help you make a larger down payment, but it will also benefit your overall financial success.

2. Pay Your Debts

Try to get rid of as much debt as you can before applying for a mortgage. Lenders will carefully review your debt-to-income ratio when deciding whether to approve you for a loan and what your interest rate will be.

If you have a substantial amount of debt, it may be difficult to qualify. To pay your debts down faster, refrain from using your credit cards, make more than the minimum payment each month, and prioritize your debts with high-interest rates.

3. Determine How Much You Can Afford 

You must figure out exactly how much you can comfortably afford to spend on a home. Carefully analyze your income and expenses to determine what you have left to pay for a mortgage each month. You should get pre-approved for a loan so you know how much you have to spend. Once you have this information, you’ll be able to see what price range you should look in while house hunting. 

If you’re ready to commit to buying a home financially, reach out to Jenny Derhake Realtor-Coldwell Banker Gundaker in O’Fallon, MO, for help navigating the process. She’ll guide you through each step from start to finish and provide you with invaluable advice along the way to ensure a smooth and successful closing. Backed by more than 15 years of industry experience, she has extensive knowledge of the real estate markets of St. Louis, St. Charles, and Lincoln counties. Call (314) 541-1771 to speak with a reputable agent or visit the website for more information.