Whether you are looking to purchase a home right away or you will not be ready to buy one for several years, now is the time to start preparing your finances. Consider these five tips:

Build Strong Credit

Your credit score will affect your mortgage rate. A low score will make it hard and sometimes impossible to buy a home. Checking your credit score can help you to see if you need to improve and where you need to improve. You should pay off past-due bills, establish credit accounts such as credit cards or other loans you are making regular payments on, and make sure your balances on your accounts reach no more than 30 percent of your credit limits.

Checking your credit report can also reveal mistakes. Correcting them will improve your credit score. But start now as it can take several months to fix inaccuracies.

Solid Employment History

A lender is unlikely to offer you a loan if your employment history is full of large gaps and constant job switches. While one or two job changes in your recent employment is not going to be an issue, lenders are not going to want to give you money if you have not proved you can hold down a job. It is also a good idea to avoid changing jobs while going through the process of obtaining a loan. If you are self-employed, obtaining a mortgage loan gets a little more complex and may require even more planning and documentation.

Calculate How Much You Can Spend

While a lender is going to approve you for a specific amount of money, that amount might be too high for your current situation. It is important for you to calculate your expenses and decide how much you can realistically afford to spend on a monthly house payment. Consider monthly expenses such as utility bills, groceries, gasoline, phone bills, and other things you buy on a monthly basis. Also take into account less regular expenses such as medical bills or car insurance. Include in your budget a specific amount of money you plan to put into savings for emergencies or unexpected expenses.

One important thing to take into account are changes in some of these expenses. For example, if you are living in an older home and are planning on moving to a more energy-efficient home, you will likely spend less on electricity.

Practice Making Mortgage Payments

If your current rent is roughly the same as you will be paying in mortgage payments, this will not be an issue. If, though, it is higher than your current rent payments, set aside that extra money, acting financially as though you are already making mortgage payments. This extra money can go into a saving account specifically set aside for your down payment. This will help you get used to living on that amount and will help you to see if it is a realistic mortgage payment. 

Visit Open Houses

Even if you are not planning to buy a home for a couple of years, go to open houses. This can give you a feel for what you can afford.

Of course, there are a variety of other things you can do to prepare to become a home owner. At San Joaquin Valley Homes, we want to make your home buying experience as wonderful as possible. Contact us to learn about homes available in your desired area.

Lisa Walker

SAN JOAQUIN VALLEY HOMES TO BUILD FIRST PHASE OF $90 MILLION, 350-UNIT COMMUNITY OFFERING ACCESSIBLE HOUSING IN TULARE You Won’t Run Out of Things to Do in California’s Central Valley