Buying a house can be one of life’s most exciting and rewarding experiences. However, it can also be a stressful and overwhelming process if not approached correctly. Before diving into the home-buying journey, getting your finances and other important details in order is essential.
Make sure you are setting yourself up for success by following these basic steps.
Check your credit
First and foremost, before you even start looking for a home, it is important to get your credit in order. Your credit score is one of the most important factors when it comes to buying a house. A good credit score can help you qualify for better interest rates and potentially save you thousands of dollars over the life of the mortgage.
To get your credit in shape, start by reviewing your credit report and correcting any errors you may find. You can obtain a free credit report once a year from each of the three major credit bureaus (Experian, TransUnion, and Equifax) by visiting AnnualCreditReport.com.
Once you’ve reviewed your report, pay off any outstanding debts and try to keep your credit card balances low. Additionally, avoid opening new credit accounts or making other large purchases (such as a car, boat or RV) before applying for a mortgage, as this can negatively impact your credit score.
Review your budget
Next, it is time to review your budget. A good rule of thumb is to aim for a monthly mortgage payment that’s no more than 25% of your gross monthly income. This figure includes the principal, interest, taxes and insurance. Don’t forget to factor in other monthly expenses such as utilities, transportation and food when determining your budget so you can truly afford the home you’d like to buy.
Use an online mortgage calculator, like the one offered at Navy Federal Credit Union, to get an estimate of what your monthly mortgage payment might look like based on different loan terms and interest rates. NFCU’s home affordability calculator on their website can help members determine how much house they can afford based on their income, debts and other expenses. This tool can be a helpful starting point and an invaluable resource for members who are just beginning to explore their home-buying options.
Lock in your interest rate and find a mortgage program
When it comes to interest rates, it’s important to lock in your rate ahead of time. Interest rates can fluctuate quickly, especially in this economy. Locking in your rate can protect you from any future rate hikes and ensure you get the best possible rate.
Another resource NFCU offers is their mortgage program. There are a range of mortgage options, including fixed-rate mortgages, adjustable-rate mortgages and VA loans. Members can apply for a mortgage online or in person at one of NFCU’s branch locations. NFCU’s mortgage program also includes options for first-time homebuyers, as well as refinancing options for those looking to lower their monthly mortgage payments or take cash out of their home’s equity.
With the right mindset, preparation and support, you can find the perfect home and begin the next exciting chapter of your life as a homeowner. Remember to work with a trusted real estate agent who can guide you through this process and help you make informed decisions along the way. Whether you’re a first-time homebuyer or an experienced homeowner, NFCU’s mortgage program and educational resources help make the home-buying process more manageable and less stressful.
This article was sponsored by Navy Federal Credit Union. For more than 90 years, their members have enjoyed so many membership perks, including great rates, discounts, cashback and helpful guides that explain a variety of financial topics in simple terms.
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