If one of your New Year's resolutions is to take the steps necessary to buy a home in the near future, you need to shake off bad habits now and pick up some good ones. Although basic good habits, such as staying on budget, are well-known, there are some habits that are sometimes overlooked. To help you stay on track with your resolution, here are some good and bad habits you should know.
What Good Habits Should You Start?
The most obvious good habit you should take on is creating a budget and sticking to it. If you have trouble with this task, talk to a financial planner who can help you analyze your finances and help you draft a reasonable budget.
Not all good habits are centered around your current financial state. For instance, now is the time to get familiar with home improvements. The more you know about home repairs and remodeling, the more money you can save on a home later. Instead of sticking solely to more expensive homes that are move-in ready, you can expand your search to homes that might need a little love and cost less.
In addition to these practices, you need to focus on building credit. Paying off your debts is not enough. You have to establish credit with borrowers to make yourself more attractive to mortgage lenders. Talk to your financial planner to determine just how much of your available credit you should use in your effort to establish credit.
What Bad Habits Do You Need to Stop?
Without realizing it, you might be practicing bad habits that can ruin your chances of scoring a home loan. For instance, even though you might have been consecutively employed during a period of time, if you frequently changed employers, this could be problematic. Lenders want to know that you are stable. Ideally, you should stay at your current employer until after you have closed on a home.
Chances are, if you went to college, you have student loans. If you do, failing to make payments on time can have a significant impact on whether or not you are able to secure a reasonable loan. Delinquent payments are reported and lenders see this as a bad sign that you will make loan payments on time.
Even if you are approved for a loan, the interest rate could make it impossible to afford. You could end up having to settle for a different home than the one you actually wanted.
Work with a real estate agent to determine what other good and bad habits you should know in your bid to buy a home.