Buying a house is the biggest financial decision most of us will ever make. While there are several steps and moving pieces, buying a house is pretty straightforward. Saving up for the down payment might be a different story, but there are more resources than you might think to help you buy a home. Before you apply for a mortgage, there are a few things to keep in mind.
Think About Why You Want to Buy a House
There's no doubt that buying a house can be a gateway to long-term and short-term financial success, but it isn't for everyone. Buying a house is an investment and long-term commitment, but you do have the opportunity to utilize the equity you've built in your home. You'll also have predictable payments, possible tax benefits (always check with a tax advisor), and, of course, the freedom to customize. A few advantages to renting include the flexibility to move faster, lower upfront costs than buying a house, and (usually) no maintenance responsibility.
Consider the Implications and Other Details
A house doesn't have to be a permanent decision, but you'll want to stay in your home for at least a couple of years to recoup the cost of buying and give it a chance to appreciate in value. Are you prepared to stay in one place for a few years? What is the current market like? Are you prepared for the extra costs associated with owning a home? Lastly, is it the right time for you to buy? Predicting the market is impossible, so if you wait for the "right time" to buy, you'll probably miss out, even if the market isn't exactly ideal.
Remember, you are just buying a house; it doesn't need to be perfect. It just needs to tick most of the boxes on your list! That said, you'll need to save up a down payment and pay home ownership costs like property taxes, home insurance, and maintenance and repairs. You'll also be dealing with market fluctuations, which could affect the equity in your home, as well as what you can resell your house for down the road.
Check Your Credit Score
If you're ready to get started finding your dream home, the second step is to check your credit score. Visit annualcreditreport.com to view all three of your credit reports and dispute anything listed that doesn't look right before you apply, as mistakes on your credit report can hurt your chances of being approved. You can also access your score separately through the three credit bureaus listed below. The higher your score, the better, but don't worry too much if it needs some work. You can find tips to increase your score in our blog, How to Increase Your Credit Score to 800.
- Equifax
Equifax.com
800-766-0008 - Experian
Experian.com
888-397-3742 - TransUnion
TransUnion.com
800-680-7289
Save for a Down Payment
You don't have to save 20% to buy a home! Every bank is a bit different, but many only require 3% for some of their mortgages, which is much more manageable. Your budget may need some adjusting while you save, and we've got some tips for you in our blog, How to Stay Financially Fit.
Check Out Grants and Programs
Similar to college scholarships, there are more out there than you think! Check with your local city, county, and state for different options available to you. Your lender is also a great resource, as many financial institutions offer programs to help people buy a home. WaFd Bank offers the Smart Start Mortgage, which also has a $5,000 grant you can apply for to put toward your down payment.*
Begin the Home Buying Process
Now the fun really begins! Not only will you shop for a lender and a home, but you'll also be filling out a lot of paperwork. Check out our article 12 Important Steps of Buying a Home to learn more.
WaFd Bank is Here to Help
At WaFd Bank, we know navigating the buying and selling process can be tricky. We've been specializing in helping people achieve their home ownership dreams for over 105 years with a variety of mortgage options to fit your needs. To find out how we can help, visit your local branch, contact one of our friendly loan officers, or give us a call at 800-324-9375.
All loans subject to credit approval, additional terms and conditions may apply.
*Grant funds are not guaranteed. Restrictions apply.
