If you are planning to purchase a Philadelphia home in the near future, there are some smart moves to ensure your finances are steady and in great shape to comfortably afford a home. Check out these smart money moves to make before buying a home.
Have an Emergency Fund
Regardless of home ownership status, every household should have a healthy emergency fund. Many working Americans discovered the importance of this in 2020 when things shut down and many jobs were put on hold. The ideal emergency savings fund should cover 6 to 12 months of all living expenses.
You want this money to be kept safe and separate and untouched during large life purchases, such as a Philadelphia home purchase. You don’t want to dip into this account to cover closing costs or a down payment. It needs to be safeguarded to use for true emergencies like the loss of a job or a medical accident or diagnosis.
Get Your Credit Score Healthy
If you have a less-than-ideal credit score or a credit report that reads “little to no history,” this will take time to correct. It is in a buyer’s best interest to retain a high and healthy credit score. When lenders see that a borrower has little to no credit history, they won’t consider a loan at all. It is considered too risky because there is no record of the potential borrower having responsibility for smaller amounts of borrowed money.
Do a Test of Paying for a Mortgage
If you have an ideal Philadelphia home in mind, it is a good idea to look at homes that are similar to what you are looking for. Check out the prices of those homes, and use a mortgage calculator to estimate a monthly payment for a mortgage on a home in that price range. Now pretend you are making those mortgage payments for a few months. Live as if you are paying for that home. This will help you to determine if this is a comfortable and affordable way to live. It will help you to adjust to a different home-buying budget or set goals to increase your income to afford your ideal home.
Save for Out of Pocket Costs
Every home buyer will need to pay some out-of-pocket costs for their home purchase. Not every loan will require a large downpayment. Some loans require zero down payment, however, the home buyer will have to pay extra in mortgage insurance. Talk over loans and purchase strategies with a financial expert to help you determine what would be the best use of your money. How much do you want to save up for out-of-pocket costs?
Not every home buyer is going to put 20% down on their home purchase. Some buyers might be able to secure a loan with a lesser term. There are many different options and plans that lead to different out-of-pocket requirements. Set goals for these costs and put them in a separate savings account to help you make the best and most financially sound home purchase.
If you are ready to purchase a home in Philadelphia the team at Victory Real Estate is here to help. A buyer’s agent is a vital and helpful advocate. When purchasing a home in Philadelphia you want a local expert Philadelphia agent on your side. An agent like Kristin Travis
“Kristen specializes in residential real estate and luxury properties. She is known for her honesty, attention to detail, and incredible work ethic. A realtor needs to be an advisor, advocate, and most importantly a friend during the home buying or selling process. Kristen is focused on helping you achieve your goals and will provide you with the honest counsel you need when you need it most. She is always planning ahead, so if you encounter a problem Kristen will be there with a solution. ”
Contact us any time with any Philadelphia real estate needs.