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- Emergency fund: An emergency fund saved up to cover unexpected costs is very important as a homeowner. Enough cash to cover 3-6 months of living expenses is ideal. This way, if your income is interrupted for any reason or unexpected expenses arise, you have enough money to still make mortgage payments until back on your feet.
- Budgeting skills: If you are already able to adhere to a budget that’s great; if you have time it’s great to try living on a homeowner budget before you buy. Try setting aside mortgage funds every month and see how you do; if you can comfortably live like this, it may be a great time to buy.
- Steady income: When deciding how much you want to spend on a home, it’s important to factor in a steady income that will be able to cover mortgage payments and other home expenses. Go a step beyond that and think about how your financial situation would be affected by different life choices such as going back to school, starting a family, or making a career move.
- Good credit score: Being familiar with your credit score and credit report is important before trying to obtain a mortgage. Any incorrect information on your report should be corrected and it’s always a good idea to know what your score is. Lenders will not only use your score to determine whether or not to lend to you, but also what kind of rates you may qualify for.