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Many individuals envision that they will one day own a home of their own, and for you, that day is coming soon. However, you are well aware of the cost associated with purchasing a house. What can you do when you want to save money and plan for your dream house?
Determine Your Path
When you are in the initial planning stages of this large project, you should start to decide whether you want to build a house or purchase a house that already exists. In the latter case, researching home plans will help to provide you with a better scope of understanding. For those who wish to purchase homes, begin to consider whether you are looking at “for now” dream homes or a forever house. These factors, in addition to deciding where you want to live, will help you to start narrowing down your options.
Get Pre-Approved for a Mortgage
Going for a pre-approval is one of the smartest decisions you can make when you are planning to buy a house or to take out a loan for one to be built. You might have an idea in your head about what you can afford, but this does not mean that the bank will approve you for that much money. When you go to the lender, you can get a figure and start to look at houses that fall within that range. Be aware that pre-approvals generally do expire after a certain period of time.
Understanding Your Down Payment
As you are filling out paperwork for the pre-approval, you are also probably going to be asked how much of a down payment you are planning to make. If you are willing to do an FHA loan, then you can generally put down as little as 3.5 percent of the total price of the house that you are paying. However, putting down more might help you to better qualify and to have lower payments for the life of the loan. Work through your budget and realistically determine how much money you can put toward a mortgage and taxes.
Conduct Trial Runs
The mortgage and taxes are not going to be the only payments you have to make as a homeowner. You’ll also have interest fees, insurance, heat, electric and all of the rest. If you think you are ready to own a home, you should see if you are actually able to put aside that amount of money per month. If you find that you are struggling to set aside this amount of money, along with any other bills that you have, then you need to reconsider the amount of house that you are able to afford or the style of house that you want to have built.
Erase Credit Card Debt
Even if you cannot completely pay off all of your debt before you make the purchase, you should be working to get rid of as much of it as possible. Having to pay for credit card debt takes away the amount of money that you are able to spend on the down payment for the house and the mortgage. Furthermore, poor credit scores could leave you with high interest rates on the loan or render you unable to qualify for a mortgage at all.
Track All Your Accounts With Personal Capital
Personal Capital lets you see all of your accounts in one convenient place. Sign up now for free.Buying a house or having one built might sound like an expensive and complicated process, but it is absolutely worth it in the end.
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