To get the most for your money when you buy a new home, your finances must be in good order. Even if you're months away from shopping for a new home, take time now to shape up your household finances. Here are a few tactics to help you.
- Reduce your debt. Being overextended may work against you when you apply for a mortgage. Try to channel more of your income away from spending and toward paying down outstanding debt. For instance, hold off on major purchases or make do with your old car a little longer.
- Check your credit rating. Your credit report will get careful scrutiny when you apply for a mortgage, so it’s a good idea to review your report beforehand. Under federal law, you can obtain a free credit report annually from each of the three national credit-reporting companies at www.annualcreditreport.com.
- Save more for down payment and closing costs. More cash on hand means greater flexibility in your financing options. For example, if you expect to stay in your home for a long time, you might choose to pay discount points at closing in return for a lower interest rate.
Once your finances are together, you can get started with a PriorityBuyer® preapproval from Wells Fargo Home Mortgage. A preapproval shows agents and sellers that you're a serious buyer, and may give you an advantage over buyers who are not preapproved.
In addition to working on your finances, you can also consider other approaches to help improve your buying power. For instance:
- Explore real estate owned properties. If you're looking for a "diamond in the rough," check our listing of real estate owned properties.
- Look for homes with hidden opportunities. Not every seller makes cosmetic modifications, like repainting, or even cleans well before trying to sell a home. Without visual appeal, these homes may not generate the same interest or buyer competition as better-maintained or recently updated homes, and may sell for a lower price.
- Find a motivated seller. Some sellers must sell their homes quickly for a variety of reasons. They might be closing soon on a new home, relocating, or looking to downsize. Regardless of the reason, motivated sellers may be more open to negotiating a good price to sell the home quickly.
- Consider multi-family homes. With a multi-family home, you can live in one unit, then rent the additional unit(s) to tenants for income that can be applied to your monthly mortgage payment. Plus, any repairs and new installations you make to your rental unit may be tax deductible.
Have questions? Contact a Wells Fargo home mortgage consultant today. Our consultants can walk you through your loan options, and help you get started when you're ready to apply.