If this is your year to buy a new home, but you’re not sure how to get started, don’t worry. The path to homeownership can actually be enjoyable and rewarding. Here are 3 tips to help lay a strong foundation for a very big investment.
Check your credit score.
According to a 2021 poll, 1 in 8 Americans don’t know their credit score—do you know yours? Knowing your credit score and understanding what it means can help you make better use of the role it plays for the rest of your financial life. And, if you’re in the market to buy a home, that can mean knowing the interest rate for which you may qualify based partially on your score. Checking your score will allow you to identify issues that could be dragging your score down—like delinquent minimum payments or credit accounts that you’re not aware of—so you can work to address them before you apply for a mortgage.
Understand your finances.
Beyond understanding your credit score, you’ll also want to become familiar with your income, liabilities and assets. These 3 variables are key to helping your lender determine what you can afford.
- Income: What you’re earning
- Liabilities: Debts you owe and financial obligations
- Assets: Property you own
It’s also critical to understand your spending habits so you can paint an accurate picture of your finances. Do you know if you have enough saved up for a down payment or closing costs? If your spending habits are preventing you from getting there, you’ll want to adjust them where you can to set money aside to cover these costs. Keep in mind, though, that not every home loan requires a down payment. Talk to your lender about your options. You’ll want to make sure you’re choosing the mortgage that best fits your current and long-term budget.
Work with trusted partners.
Trust is an important thing—especially when you need to lean on an expert. When you’re looking to buy your first home, you’ll get much better results if you work with people you trust. Your mortgage lender and your real estate agent should pass your “gut check.”
For example, if you’re looking to settle down after a military career, you may feel more comfortable working with a lender and real estate agent who have more experience in helping Active Duty military, veterans and their families. Your financial institution may even have a program to help place you with an experienced real estate agent that fits your needs, like RealtyPlus® through Navy Federal Credit Union.
Bonus Tip: Plan to become a happy homeowner.
Becoming a homeowner is one of life’s major milestones. Planning ahead and visualizing the outcome you want to see using the tips mentioned here, along with working with the right professionals, can help simplify and streamline the process.
- Request a copy of your credit report (you’re entitled to one annually). Look for any errors and seek to resolve them, as well as opportunities to improve your score quickly.
- Connect with a real estate agent through RealtyPlus® to begin looking for a home. Then, when it’s time to buy, contact Navy Federal—or your preferred financial institution—to discuss mortgage loan options.
This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.