Learn how to prepare for your home purchase and maximize your wealth building efforts…
It is important that you know the important concepts that are needed as you purchase your home so that you can make your home purchase “neat and simple” in your mind, even though it may appear daunting and fearful in the minds of others who have not prepared properly and don’t know what to expect in the home buying process.
Not only is it appropriate to keep your finances in good order in general by keeping things neat and simple—so too is it important that you keep the home buying process neat and simple as it allows you to build wealth more efficiently.
If you allow it (you lack the mental fortitude that is needed to manage your finances effectively) the home buying process can be a stressful experience.
Your goal should be to keep the home buying process as neat (understandable as possible to your mind) and simple (knowing the steps that are ahead of you right now instead of being shocked as it occurs in your future) so that you can reduce or eliminate the stress or anxiety that it can cause in your life (your family members and those whom you are around will also feel it as well).
The home buying process is often stressful for many because those who lack the preparation go in not understanding their current cash flow position, current credit position and not having a clue about how their overall finances are integrated within their life. By having a real understanding of how your finances are all integrated it may provide you the direction that you need to achieve better results with less effort.
It is imperative that you know what lies ahead whether it be your home purchase or any other major financial maneuver that you may make during your lifetime.
You must be determined to learn what not to do on the front end–not after you are in the middle of a transaction or after you know you have made mistakes!
Ok, here we go…
Are You Really Ready For a Home Purchase?
The first and in many cases the most important question to ask is are you ready for a home purchase. Do you have an effective down payment and reserves along with a properly funded emergency fund? If you don’t, will you be in position after your home purchase to build your emergency fund or add to your emergency fund in a way that will put you in a stronger financial position?
Are you ready for making an offer, negotiating, making a counter offer, inspection and possible amendment (addendum) so that you can close on your purchase in a timely manner?
Do you know all of your maintenance responsibilities and do you know the age and functionality of the major components in the home that you anticipate buying? Are you aware of environmental factors inside and around the home that you are considering for purchase?
Are you ready for the interior and exterior maintenance that is required including gutter maintenance, yard maintenance along with all of the associative costs of home ownership?
Do you currently know your cash flow position now–and after you purchase your home? Do you know your front end and back end ratios along with the discretionary income that you will have left over on a monthly basis so that you can enjoy life and save at a level that will take you toward your goals throughout your lifetime?
Do you know how long you plan on staying in the property in question and have you looked at the end–when you plan on moving–at this time to see if a purchase serves your greater interest?
These are the types of questions that you must ask and answer on the front end–not after your home purchase!
Do You Have the Understanding & Application of Credit Knowledge that is Necessary?
You must know how to build and manage your credit effectively throughout your lifetime.
You must know in certain terms that you must always pay on time, use your credit responsibly by not running up balances that make it difficult for you to pay off, know how the time length of your credit activity affects your credit and credit score, know the types of credit that you have and why it is important that you have an appropriate mix based on your future goals–and know the importance of keeping inquiries at a minimal level–depending on your future goals.
Having that understanding is one thing, actually using that understanding to effectively manage your unique credit position throughout your life is a totally different question! However, if you are to make your home buying and home ownership period of your life as enjoyable for you and your family as possible you must put yourself in position to understand and apply your credit knowledge in a practical way throughout your lifetime.
Do You Know All Areas of Your Finances that You Must Address & Are You Prepared to Address those Areas?
In addition to knowing your credit position prior to your home purchase you must also know your comprehension of your overall finances. Have you addressed your insurance, investments, taxes, emergency fund, education planning, estate planning/wills and your retirement planning in a way that maximizes the benefits to you and your family.
You maximize the benefits by examining all of the above areas at a level that is the absolute best that is within you–and then make improvements where necessary based on your current financial ability and “your recently learned skills” that allows you to comprehend your overall finances and act in a manner that serves your and your family’s best interest.
Although the home buying process can be difficult for many, you can ease the process considerably by:
1) determining “your readiness for your home purchase at this time”
2) determining “your level of credit preparedness at this time”
3) determining “your level of overall preparedness with all areas of your finances at this time”
Your determination and commitment to learn in advance of your home purchase how to approach your finances in an intelligent, consistent and proactive manner will set you apart and make your home purchase and home ownership period much more prosperous than those who fail to take the beneficial steps that were addressed in this discussion.
All the best to your home buying and home ownership success…
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