Tamara Bodrick: Hi! I am Tamara with Wells Fargo & Company. Buying your first home is an important milestone for most people and maybe the largest purchase you ever make. As a result you may need to create a financial plan in order to understand the financial considerations that go along with purchasing a home.
A financial plan will increase your chances for a successful start and gaining the best possible mortgage term for your home loan. You can prepare for your home purchase by taking a close look at your income, expenses, savings, credit and borrowing ability.
You'll need to find out about your credit history, assess your ability to make payments and determine whether you can borrow using collateral or find other sources of funds like relatives. The key steps in your financial plan include checking your credit history, comparing your income and expenses and determining the total amount of your savings and down payment sources. You can start by getting a free copy of your credit report from AnnualCreditReport.
This site allows you to request a free credit file disclosure commonly called a credit report, once every 12 months from each of the nationwide consumer credit reporting companies, Equifax, Experian and TransUnion, be careful to review your reports entries and immediately contact the credit agency about any errors. They will investigate and respond in about 30 days you should make a plan to get your credit in shape if necessary and establish a budget.
Next, you should take a look at your income and expenses and determine how much you can afford to pay each month for your mortgage. Then you can use a loan calculator provided on most bank websites to estimate payments for various mortgage amounts and interest rates. Be sure to account for home repairs and other home expenses not covered as part of your monthly mortgage payment.
And finally, you should determine how much down payment you will need and where you can get those funds if you don't already have them. Once you complete a financial plan like this, you can be on your way to buying your first home.