Buying a home is one of the most significant investments that a person can make. From a financial perspective, real estate is a valuable asset for anyone looking for a strong eventual return on investment. On a day-to-day basis, your home serves as the center of your life. Before someone is ready to commit to owning their own home, it would be wise for them to establish themselves as financially secure and responsible so that they stand out to lenders as someone worth loaning money to. This can be easier said than done, so here are three quick tips to help keep your financial resume looking good.
Build a good credit history
This is of the utmost importance. A lender would much rather loan money to an individual who has a history of paying off their debts on time than one who does not. A simple way to build good credit at a young age is through a credit card. Make sure you pay off your credit card debt on time each month as a way to lay the groundwork for having a good credit score. Having a good credit history indicates that you will continue to make your payments on time in the future, which will appeal to your potential lender. Additionally, individuals with good credit scores are more likely to take out loans with lower interest rates, meaning they will pay less in the long run than a lendee with poor credit.
Avoid large purchases
Large purchases usually put the buyer into debt, and making a number of these purchases, even if the debt payments are made on time, could wind up being problematic when you’re looking to buy a home. This is because the money you make compared to how much debt you have can have a substantial impact on how much money a lender is willing to loan you.
Limit monthly subscription services
This is a life tip as much as a piece of real estate advice. It would behoove any subscription service user to keep tabs on their different accounts to make sure they don’t accidentally continue to pay for something that they don’t use or that they simply forgot they purchased in the first place. Those monthly payments can add up, especially if a handful of them are being made unnecessarily. Having too many subscription payments could also hurt you in the eyes of a lender because you would be labeled as having high credit utilization if your report is pulled in the middle of a cycle.