You've either, decided, it's the right time, for you to, own, a home, of your own, or to upgrade, and/ or relocate, for some, personally, relevant reason. If your objective is, like most home buyers, to make the process, as stress - free, and hassle - free, as possible, quality, proper, efficient, effective preparation, is the best way, to proceed. House - hunting might, either, be, a pleasant adventure, or far, less, so, and, thus, this article will proceed, to attempt to briefly review, examine, consider, and discuss, 5 preliminary financial steps, to take, in advance, before proceeding, along a well - considered, path.
1. Credit report: Doesn't it make sense, to comprehensively, review your credit report, and examine it, thoroughly, to discover, if there are any errors, and/ or, omissions? Fix any error, in a well - organized manner, and realize, it takes a considerable amount of time, for this process. Carefully amend, by obtaining your free copy of your credit report, from all three, major, Credit Reporting Agencies. If you have difficulty doing so, yourself, it often makes sense, to hire a reputable company, which specializes in this process and procedure.
2. Avoid additional credit: Since you should begin this process, at least 6 months prior, it's important, to avoid applying for, or taking out any additional credit, during this period. We are often tempted, when stores, for example, offer us a discount for using their credit card, but, you should realize, doing so, might adversely impact, your credit - worthiness!
3. Disciplined savings: Home buyers will, also, need to prepare, for items, such as the down - payment, or necessary financial reserves, which are, often required by the lending institutions, as well as being a comforting approach!
4. Be prepared for the 3 needed reserves: You will need, to prepare, for, at least, 3 needed, and necessary reserves. One should be, for the deposit (often, 20%); another, for your monthly reserves, such as utilities, repairs, up - keep, etc; and the third, for contingencies (unanticipated expenses, or deciding, there is a need for some renovation, and/ or alteration).
5. Know your limitations: Beware of becoming someone, who is house - rich, and cash - flow, poor! Objectively, know and identify, your personal limitations, and comfort zone! Avoid placing too much emphasis, on your ego, and consider, whether you are seeking, a home, you can afford, and, thus, will, truly enjoy!
Taking the time and effort, to properly prepare, and be ready, for home ownership, is the wisest course, and path, to take, before embarking on house - hunting. It's up to you, to proceed, wisely, and in a prepared manner!