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How to Prepare Financially Before Buying a Home in Today’s Market

Buying a home is a major milestone—but in today’s competitive market, it requires more than just a dream. With fluctuating interest rates, rising home prices, and tight inventory, being financially prepared can give you a significant edge and help you avoid costly surprises. Here’s a practical guide to getting your finances in shape before making one of the biggest investments of your life.


🧾 1. Know What You Can Afford

Before you fall in love with a home, understand what you can realistically afford. This means considering not just the purchase price, but also:

  • Monthly mortgage payments

  • Property taxes

  • Homeowners insurance

  • HOA dues (if applicable)

  • Maintenance and utilities


Most experts recommend keeping your total housing expenses below 28–30% of your gross monthly income.


💳 2. Check and Improve Your Credit Score

Your credit score plays a huge role in your mortgage interest rate and loan approval. The higher your score, the better your loan terms.

  • Check your credit report for errors.

  • Pay down credit card balances.

  • Avoid taking on new debt or opening new credit lines before applying for a mortgage.


Aim for a score of 680 or higher for better loan options. FHA loans may allow for lower scores, but with added costs.


💼 3. Save for a Down Payment + Closing Costs

Start saving early! While 20% down is traditional, many loans allow for as little as 3–5% down depending on the loan type.

  • Down Payment: A larger down payment can reduce your monthly payment and remove private mortgage insurance (PMI).

  • Closing Costs: These typically range from 2%–5% of the home’s purchase price and include fees for inspections, appraisals, title insurance, and more.


Pro tip: Don’t drain your entire savings! You’ll want to keep an emergency fund intact even after closing.


🏦 4. Get Pre-Approved for a Mortgage

Pre-approval shows sellers that you’re a serious, qualified buyer and helps you shop within your budget. During pre-approval, a lender reviews:

  • Your income and employment

  • Your credit score

  • Your debt-to-income (DTI) ratio

  • Your savings and assets


Getting pre-approved before house hunting can give you a competitive edge in today’s fast-moving market.


📉 5. Understand Current Market Conditions

Interest rates, inventory levels, and competition vary depending on your location and timing. Speak with a local real estate expert and lender to understand:

  • Whether you’re in a buyer’s or seller’s market

  • How interest rate changes impact your monthly affordability

  • What type of properties fit your price range in your desired area


Being informed helps you act quickly and confidently when the right home appears.


🛠️ 6. Budget for Post-Purchase Expenses

Don’t forget about costs that come after you get the keys, like:

  • Repairs or renovations

  • Furniture and appliances

  • Moving expenses

  • Property taxes and insurance escrow adjustments


Having a buffer budget can help you avoid going into debt right after moving in.


🎯 Final Takeaway

In today’s housing market, preparation is everything. By checking your credit, saving smart, understanding your loan options, and getting pre-approved, you’ll position yourself as a confident and competitive buyer. With the right financial foundation, your path to homeownership will be smoother—and more rewarding in the long run.


Scott Sweeney

Your NorCal Realtor

M&M Real Estate

BRE Lic# 01938720

Cell: Call/Text 707-330-2324


About Scott Sweeney


SweeneySells

Full Time Realtor 13 Years +

Over 100 Families Served

Top 5% Producing Agent

Buying & Listing Specialist

Contract & Negotiation Ninja

CSUS Business & Marketing Graduate 2006


With quickly serving over a 100 families, Scott Sweeney has become a top 5% producing Realtor in the greater Sacramento area who has helped clients from the Bay Area to South Lake Tahoe. Scott has a Bachelor Of Science in Business Administration, with a concentration in Marketing from CSUS. His education, and extensive background in the hospitality, marketing, and real estate industries, have helped Scott to become one of the leading, and most sought after agents in the area.


Reach out to SweeneySells today, and take the first step towards your real estate goals!

📞707-330-2324




Top Producer 2016-2023


"I appreciate your business & referrals!"


Hours Mon-Fri 9am-6pm

Sat By Appointment

Sun Off


Schedule a call or zoom with us here! 👇




 
 
 

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