Buying a home is a several step process, and it begins before you even look at potential properties. Laurie Ellis-Mcleod, president of AERIE Preferred Financial Group, offers 6 tips to prepare you to buy this spring:
1. Don't dip into your retirement funds. "You can't finance retirement. You need to rethink your plan to buy if you have to dip into your IRA or 401K to make it happen," says Laurie.
2. Watch your spending. You don't want to hurt your credit during this crucial time. Avoid the temptation to close an account, open a new one, or make a large purchase. Your lender will be looking at all of these things, and any one of them could negatively impact your credit score.
3. Make sure you understand the full cost of ownership. Talk with your realtor, and be sure you understand the tax, interest, insurance and utility costs involved with owning a property. There may also be other expenses, like a monthly condo fee or annual neighborhood fee that you need to consider.
4. Make your credit score as good as you can get it, and get preapproved at a high time. How do you do this? Make sure you've created a record of paying your bills on time, avoiding debt and fix any mistakes you may have made that could hurt your score. You can get a free credit report from all three of the major bureaus, Experian, Equifax and Transunion. For a small fee, you can also get your current score.
5. Do your best to put at least 20% down on your home purchase. By having a strong down payment, you avoid the added costs of private mortgage insurance. The only exception is if you qualify for a special mortgage program, that can allow you to have a lower down payment.
6. Don't take on more than you can handle. You may want a big, beautiful home with modern finishes, but you also need to consider your savings for retirement, and for future emergencies. You also need to consider the spending flexibility you want to enjoy, and how a new mortgage will affect this. A qualified realtor is well suited to help you examine your options and make a good financial decision.
Laurie Ellis-Mcleod is the founder and president of AERIE Preferred Financial Group. She is independent, which means she can work with investment and insurance products from a wide variety of providers, without being obligated to sell one line. She offers a complementary consultation to all potential clients. For more information, and access to all kinds of financial planning tools, check out her website at:www.aeriepfg.com.
Securities offered through International Assets Advisory, LLC Member FINRA/SIPC. Investment Advisory Services offered through International Assets Investment Management, LLC. International Assets Advisory, LLC and International Assets Investment Management, LLC are affiliated companies.