If you’ve been thinking about buying a home this year, now is the time to set yourself up for success during the busy summer buying season.

That said, here are five ways to financially prepare for buying a house to ensure you’re ready to make the most of the opportunities that arise:

1. Improve your credit score.

Your credit score plays a significant role when applying for a home loan; improving it can provide competitive financing options. Be sure to review your credit report and dispute any errors. Lower your credit utilization rate and make timely payments to boost your score.

2. Reduce your debt-to-income (DTI) ratio. 

A lower DTI ratio increases your chances of getting a home loan. As you’re able, pay down high credit card balances and personal loans before applying for a mortgage. 

3. Prepare for closing costs and savings: 

You’ll need funds to cover closing costs, a down payment, and a sufficient cash reserve. You can use tools like mortgage calculators and apply the 28/36 rule to get a general understanding of affordability. But of course, it’s best to work with a mortgage professional to get personalized advice once you become serious about buying a home. 

4. Season your down payment funds. 

Lenders prefer “seasoned” funds — funds in your possession for at least 60 days. Be prepared to provide documentation explaining the sources of your down payment if not. 

5. Avoid new debt. 

Large personal purchases can complicate the lending process, so communicate with your lender before making major purchases. 

Buying a house is one of the most significant financial decisions you’ll make, so it’s crucial to prepare as we approach the most traditionally active time of the year for the real estate market. 

If you have any questions or need further guidance, let us know. We are more than happy to help.