If you’re thinking of becoming a first-time homebuyer in Atlanta, you’ve chosen a great market in which to buy. The Atlanta area offers many terrific neighborhoods accommodating many lifestyles and price points, and with a thriving housing market, owning real estate in this area can be an excellent investment. That being said, buying a home for the first time can be a daunting challenge financially, and it takes some advance preparation to navigate the process successfully. Let’s look at some personal finance tips for buying your first Atlanta home.
Start Saving Now
A healthy savings account is important for first-time buyers for a number of reasons:
- Banks will look at your savings and other assets to evaluate your ability to handle a mortgage.
- The buying process often includes unexpected expenses and tucking money away can help you handle these if they arise.
- Most mortgage loans require a down payment.
Simply put, the sooner you can start saving, the more you can save and the better you will look to lenders.
Check and Monitor Your Credit
Before applying for a mortgage, it is always a good idea to know your credit score and what is on your report. Federal law entitles you to a free copy of your credit report from each of the three major reporting agencies every 12 months, which you can obtain here. You can also explore a number of paid credit monitoring services like Identity Guard or Privacy Guard, which allow you to pull you own credit reports more frequently, alert you to any suspicious activity and help you strategize to improve your credit. Different lenders have different criteria for minimum credit scores, but generally speaking, the higher your score, the easier it is to qualify for a loan and the lower interest you will pay.
When you get your credit reports, look through them carefully and look for any errors and inaccuracies that might be lowering your score, and report them to the credit agency to have them corrected or removed. If you have a sizeable amount of debt or negative marks due to collections, you may want to take some time and pay the debt down to improve your score before applying for a mortgage.
Get Your Paperwork in Order
In addition to good credit and money in the bank, lenders also want to know about your income and expenses, as well as your work history, in order to determine your financial stability. They will want to see bank statements and tax returns going back at least a couple of years, plus some pay stubs from your current employer. They may also ask about how long you’ve been employed and your previous work record to establish a pattern of income. Getting this information together in an organized fashion can help streamline the approval process.
Avoid Making Other Major Purchases or Life Changes
Lenders look for financial stability and consistency, especially among first-time buyers. If you’re thinking of switching jobs, you might want to get established with your new employer for several months before trying to buy a home — or stay with your current employer until you’ve closed on your house, then make the switch. Also, making major purchases (especially with financing) can cause fluctuations in your credit which may make it more difficult to gain approval from a mortgage lender. When preparing to buy a home, save those larger purchases for a later time.
Buying a home for the first time can be both exciting and scary but taking the time to prepare financially will help the process go much more smoothly. When you’re ready to look for your first home in Atlanta, call Atlanta Fine Homes Sotheby’s International Realty at 404.948.4812.