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What are 3 things I can do now to prepare to purchase a home?

Buying a home in California is likely the biggest purchase you’ll make in your lifetime. It’s easy to get lost on where to start the journey toward homeownership. Here are 3 things you can do now to prepare for your future home purchase.

1. Save Money - Having a good savings plan is essential to purchasing a home. There is no such thing as having too much money saved to purchase a home; The more money you have saved, the better. A large downpayment will increase your chances of getting an offer accepted, it will lower the amount of money you borrow, and will lower your monthly payment. Beyond the downpayment, there are move-in expenses. Closing costs, furniture, repairs, improvements are all common expenses associated with purchasing a home.

2. Pay Off / Pay Down Debt - Less debt generally leads to an improved credit score. Your credit score will be one of the determining factors on what type of loan you qualify for, and ultimately what your interest rate will be (the higher the credit score, the lower the interest rate). In addition lenders use a ratio called “debt to income” to qualify you for a home loan. This is the ratio between your monthly debt obligation and monthly income. The lower your monthly debt obligation the more you loan you will qualify for.

3. Increase Income - This may be obvious, but it’s absolutely true. Side hustles and raises at work can make a huge difference when preparing to purchase a home. Your “debt to income” ratio is one essential factor a mortgage lender takes into account when qualifying you for a home purchase. The lesser your debt obligation and greater your income, the more home you’ll qualify for. Increased income can help you to pay down debt obligations and heat up your savings plan.