Smart Money Tips for Future Homeowners
Your Path to Homeownership Starts Here
Owning a home is a significant milestone, but it requires careful planning and financial preparation. At M&T Bank, we understand that every individual’s situation is unique, and there’s no one-size-fits-all approach to finances. That’s why we’re committed to helping you set yourself up for success, so you can achieve your homeownership goals.
Laying the Foundation
Before you start house hunting, it’s essential to get your finances in order. This process may take time, but it’s crucial to set yourself up for success. Here are six smart money tips to help you prepare for homeownership:
1. Monitor Your Credit
Your credit score plays a significant role in determining your loan terms and interest rates. Check your credit reports from Experian, Equifax, and TransUnion at least once a year to ensure accuracy. By tracking your credit score, you can identify areas for improvement and work towards securing better loan terms.
2. Create a Debt Payoff Plan
Lenders consider your debt-to-income ratio when evaluating your mortgage application. By implementing a debt payoff plan, you can improve your chances of qualifying for a better mortgage rate. Focus on paying off high-interest debts and work towards reducing your debt-to-income ratio.
3. Build an Emergency Fund
Having a separate savings account with at least three to six months’ worth of living expenses can provide a financial safety net. This fund will help you cover unexpected expenses, such as repairs or medical bills, without relying on high-interest credit card debt.
4. Develop an Investment Strategy
Diversifying your investments can help you achieve long-term financial goals. Consider contributing to retirement accounts, such as a 401k or IRA, to build wealth over time. This will help you maintain a balanced financial portfolio and reduce your reliance on the value of your home.
5. Set a Home Savings Goal
Calculate how much house you can afford by considering your mortgage payment, taxes, insurance, and other expenses. Set a realistic savings goal for your down payment and added upfront costs. Aim to save at least 20% of the purchase price to avoid paying private mortgage insurance (PMI).
6. Open a Dedicated Home Savings Account
Separate your home savings from your everyday spending money by opening a dedicated account. Label this account with your goal, such as “dream home” or “first house fund,” to stay motivated throughout the savings process. Set up automatic transfers to ensure consistent progress towards your goal.
Take the First Step Towards Homeownership
By following these smart money tips, you’ll be well-prepared to take the leap into homeownership. Remember, buying a home is a significant decision, and it’s essential to prioritize your financial readiness. With M&T Bank’s expert guidance, you can navigate the mortgage process with confidence.
Get Pre-Approved with M&T Bank
Before starting your home search, consider getting pre-approved for a mortgage with M&T Bank. Our loan experts will work with you to complete a full underwriting review of your application, providing you with peace of mind and confidence in your financing.
Equal Housing Lender
This is not a commitment to make a mortgage loan. Actual loan qualification is subject to income and credit verification along with property approval and other factors. Rates and terms are subject to change without notice. ©2020 M&T Bank. Member FDIC. NMLS #381076. Investing involves risks, and you may incur a profit or a loss. Asset allocation/diversification cannot guarantee a profit or protect against a loss. This material is provided for informational purposes only and is not intended as an offer. Investors should seek financial advice regarding the suitability of investment strategies based on their objectives, financial situations, and particular needs. There is no assurance that any investment strategy will be successful. Investments: Are NOT FDIC Insured * *Have NO Bank GuaranteeMay Lose Value Brokerage services are offered by M&T Securities, Inc. (member FINRA/SIPC), not by M&T Bank.
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