5 Financial Tips for When You’re Preparing to Buy a Home

Last updated on June 13th, 2024

Thinking of purchasing a new home? It’s never too early to prepare your finances. With a little preparation and planning, and by making small changes, you’ll ensure that your road to homeownership will be as smooth as possible.

Here are five helpful tips to keep in mind when preparing to buy a new home:

1. Review Your Credit Report

Whether you’re thinking of purchasing a new home or not, reviewing your credit report for discrepancies is always a good idea. Check with any of the three major credit reporting agencies Experian, TransUnion, and Equifax – to obtain your credit report. By doing this in advance, you’ll allow yourself time to clear up any mistakes before you’re ready to apply for a mortgage.

2. Pay Your Bills on Time

Your payment history is a major component of your credit score. It’s one of the most important factors when securing a mortgage or other types of credit.

To manage your bills and avoid late charges, try setting up auto-pay, scheduling the same day on your calendar each month to pay the bills, and consider bill reminders via email or text. Find whatever works for you and get in the habit.

3. Avoid Opening New Lines of Credit

It might be tempting to open that department store credit card to save 20% on your purchase, but opening too many new lines of credit quickly is considered a risk and could lower your credit score. Also, avoid making any large purchases using credit before applying for a mortgage.

4. Keep Unused Accounts Open

By closing old credit card accounts you’ll risk lowering your credit score, as this will reduce your available line of credit. Keep your oldest account open to preserve the length of your credit history. Wait until you’ve moved into your home before closing accounts and spread out closures over time.

5. Save for Your New Home

It’s important to start budgeting as early as possible, so you can start putting away money for a down payment – the larger your down payment, the lower the risk (at least in the eyes of the lender). To build up your down payment, consider cutting back on unnecessary spending, setting up a dedicated savings account, and starting a direct deposit.

By taking these small steps, you’ll reap the rewards in a big way. With the proper planning, you’re sure to find a smooth path to homeownership.

For more information on financing your new home purchase, talk to the experts at Toll Brothers Mortgage Company, a subsidiary of Toll Brothers.