(PRWEB) April 29, 2011
Spring is widely known as the busiest season for the housing market. It’s important for potential home buyers to understand the home buying process, and make any necessary adjustments that will improve their financial readiness.
Matt Vernon, retail sales executive at Bank of America Home Loans, offers some tips to help homebuyers prepare for homeownership:
1. Homebuyers should assess their finances and monthly obligations. Developing a budget to track spending over several months can help create realistic savings goals. This process also reveals how much a borrower can realistically put towards mortgage costs in addition to other monthly bills.
2. Saving for a down payment is another important step in preparing to buy a home. Down payments typically range from 5 to 20 percent of a home’s purchase price. The more money a buyer has to offer upfront, the more attractive he or she will be to a lender.
3. Setting up a separate down payment savings account encourages homebuyers to make a habit of depositing money on a regular basis. Buyers with modest incomes or those having trouble saving can work with a lender to identify mortgage programs with flexible, low down payment options or housing programs designed for these situations.
4. Potential homebuyers need to be aware of their credit score and how it impacts buying power. Credit scores are used as both an indicator of past financial habits and as a sound predictor of future behaviors.
5. Buyers should check their credit reports at each of the various credit bureaus at least once a year to look for mistakes or fraud. Checking credit scores and working with a lender at the beginning of the home buying process can help homebuyers learn if they will be eligible for a home loan, the types of mortgage terms they may expect, or if they should continue to improve their financial picture before buying.
6. Managing and reducing debt and being aware of their debt-to-income ratio, the percentage of monthly gross income that goes toward paying debts, are additional steps homebuyers can take to improve their financial health. Buyers should take inventory of their debts and develop a plan to minimize any unnecessary expenses.
While there are a number of considerations involved in preparing for homeownership, working with the right lender and real estate professional can certainly make the process less complicated. More information can be found in Bank of America’s Home Loan Guide, available at http://myhome.bankofamerica.com.