Improve your credit before buying. Your credit score plays a big part in the mortgage rates that lenders will offer you. If you want to help yourself get a good rate and save money over the long term, focus on your credit score before buying a home.
Make as large a down payment as you can. The larger your down payment, the smaller your mortgage. So if you want to help yourself avoid larger interest payments over the life of your mortgage, make as big a down payment as possible. The old benchmark is 20% but it’s all right if you don’t have that much. Many mortgage lenders will accept down payments as low as 3.50%. Just keep in mind that you will probably pay insurance if you put down less than 20%. The closer you get to 20%, the more you can potentially save.
Don’t overspend. When it comes to your down payment and to your home in general, it’s important to know how much house you can afford. If you overspend, you will only put yourself deeper into debt. And make sure that you consider some of the other costs that go into buying a home, like closing costs.
Get a second opinion. If you need help understanding how much you can afford and the ideal time for you to buy, consider speaking with an expert. A financial advisor can look over your entire situation with you to determine whether buying a home is the right choice at this point in your life. And that includes a holistic look at your other goals, like saving for retirement or planning for a family. To help you find an advisor, start with this free financial advisor matching tool. It’ll show you which advisors are in your area and give you information about them, so you know what to expect if you choose to work with one.