Renaissance Realty South | Marilyn McDonald

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Financial Savvy: A Homebuyer’s Guide to Smart Financial Choices

When it comes to homebuying, making the right financial decisions is key to a smooth and successful journey. In this article, we’ll explore some essential do’s and don’ts to help you navigate the financial aspects of purchasing your dream home.

  1. Timing Is Everything

One crucial financial consideration is the timing of large purchases. It’s a smart move to prioritize your home purchase before buying that new car you’ve had your eye on. Financing a significant new purchase before securing a mortgage can have adverse effects on your homebuying process. It reduces your loanable amount, may negatively impact your credit score, and limits your ability to purchase due to increased utilization and decreased available credit.

  1. Know Your Numbers

Once you’ve received your pre-approval from your mortgage lender and have a clear understanding of your maximum purchase price, take the time to familiarize yourself with the numbers. Understand what your monthly mortgage payments will look like at your maximum amount and calculate your approximate total cash needed for closing. Being aware of these figures will allow you to make informed decisions about the price of your future home and where your closing funds will come from. Whether it’s a gift, 401K, seller contribution, GA Dream, or other approved documented funds, having a plan in place is crucial.

  1. Explore Your Loan Options

It’s essential to explore the various loan options available to you. Ask your mortgage lender about potential loan programs, including state and city programs that can help you save money. These programs often benefits such as no down payment requirements and assistance with closing costs and down payments. To qualify, you may typically need a minimum credit score of 640, a low debt-to-income ratio, and you should be aware of any total household income limits that may apply.

In conclusion, making informed financial decisions is paramount when embarking on your homebuying journey. Avoid making significant purchases before securing your mortgage, understand your numbers, and explore available loan programs that could save you money. By following these financial do’s and don’ts, you’ll be well-prepared to make wise financial choices and secure your dream home.