If you are planning to buy your first home this year, put yourself in the best position to do so by sticking to these ten financial fitness tips.
Consistently save as much as you can
Saving money is a good financial strategy no matter what stage you are in but when you are planning on buying a home, consistency is key. This will allow you to reach your goals but it is also a good sign to lenders that you are financially stable and able to make repayments on a bond.
Try avoiding any big purchases
You are about to make one of the biggest financial decisions of your life and being able to repay your bond is more important than having a brand new state-of-the-art TV. Rather than spending money on new things, get used to bond repayments and living within your means and leave the new things for later when you are comfortable in your new normal.
Carefully consider career moves
If you are about to buy a home, hold off on switching jobs or becoming self-employed until you have bought your home. It will help when you are applying for a home loan if you have a consistent employment record and will have one for the foreseeable future.
Only use your credit card when it is really necessary
Using all the credit available to you before buying a home is not a good idea – it will only show that you are relying on credit to get through the month and that is not what lenders are looking for in someone they are about to give a large sum of money to. Again, wait on the big purchases and live within your means.
Pay your accounts and cards on time
Ensure that you are paying back any credit cards or store accounts on time and consistently – it shows that you are serious about making payments on time and that you will do so with a home loan repayment as well.
Understand your credit score
Make sure that you understand your credit score and all the factors that influence it. Make sure that you check it often and make the adjustments where necessary to achieve the best possible score before you apply for a loan.
Correct any errors on your credit report
While it is also important to understand your credit score, you will need to make sure that there are no errors on the report either.
Co-signing a home loan? Make sure you understand what that means
If you are applying for a home loan with your partner, spouse, or a friend or family member you will need to make sure that you understand what that means in terms of your legal responsibilities and what would happen in the worst-case scenario.
Your best bet would be to talk to an attorney to help you set up a contract and to help all parties understand what their responsibilities are.
Be transparent
When you are applying for a home loan make sure you are transparent and honest about all your financial commitments and sources of income.
You will also need to be honest with yourself about all your spending habits throughout the month to make sure you don’t overcommit. One of the best ways to make sure you know what you spend in a month is to do a lifestyle audit.
Before you even start your house hunting journey, get yourself prequalified to know exactly what type of loan you are looking at.
Educate yourself on all the costs
Buying a home is not just about the price tag on your dream home. There are many other costs associated with buying a home and you need to know what they are and prepare accordingly.
Article Source: https://www.myproperty.co.za/news/market-and-opinion/10-financial-fitness-tips-for-first-time-home-buyers-07-01-22
