Buying a home is part of the American dream, but it can be challenging to pay for it all. Figuring out the down payment is just the start; you also need to consider closing costs and how you’ll pay for renovations or repairs, especially if you choose to buy a home as-is. That’s why it’s so important to cut down your debt and get your credit into great shape, but how do you get started?
The key is to figure out a budget and work out a plan for getting rid of your debt. When you’re ready to start the search for your dream home, take a look at Tracysellscanopycreek.com and reach out for the help of a pro.
Here are a few things to consider when you’re ready to start saving for a home:
Determine whether you can afford a house “as-is”
Even after you’ve cut down on your debt and built up your credit, will you be able to afford a new home? Aside from a hefty downpayment, houses require upkeep, insurance, and taxes, all of which can be costly if you’re not used to them. In order to save a little money on the home itself, you might consider looking for one that’s being sold “as-is”. These homes are sold without any repairs on the seller’s end, so it’s crucial that you understand what you’ll be responsible for, as well as what to look for. Structural problems, mold, pest infestations, and leaks in the roof are all issues that you would have to repair yourself.
Protect your business with an LLC
When making a major purchase of any kind, it’s important to ensure that you have all the right paperwork to apply for a loan. Bank statements are especially crucial if you’re self-employed, as well as tax returns and any other proof of your income. Once you’ve gathered all the essential documents, consider protecting your assets by forming an LLC. This is a great way to separate your personal and professional finances, and you’ll also get tax benefits and flexibility. Every state has its own rules for formation, so read up on the steps that are specific to LLC Florida. Not only will having an LLC give you peace of mind and save you money on the business end, it will also lend some credibility to your employment status when you’re ready to apply for a loan.
Reduce your spending
While it may seem silly to cut back on little things when you’re trying to save money for a house, those things can really add up if you stick to a plan. Once you know how much house you can afford and have protected your assets, you can create some goals and work out a plan for reducing costs. Things like carpooling to save on gas, eating at home, washing your own car, and working out at home rather than going to the gym can all have a positive impact on your budget. Over the next 6 months to a year, these savings will add up and help you pay off your debt faster.
Be strategic about your credit
Saving money is only one aspect of preparing your finances; you also need to be strategic about how you use and boost your credit. In general, it’s a good idea to stay away from department store credit cards, as these aren’t viewed the same as bank cards by lenders. Pay your credit card bills on time, and pay more than the minimum balance each time if possible. Don’t open any new credit accounts or charge major purchases around the time you apply for the loan, as these can negatively affect your approval chances.
Buying a new home is an exciting life event, but it can also be stressful if you aren’t financially prepared. Pay down your debt and create a plan for protecting your business by forming an LLC; if you’re looking at “as-is” homes, make sure you understand the details. With the right moves, you can save for your dream house in no time.
Ready to start looking, or have a question about the homebuying process? Contact Tracy Madden at Tracysellscanopycreek.com today.
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