Money Management Prep for Homebuying

If you’ve been researching how to buy a home, you’ve probably noticed the first step is often “get your finances in order.” But what does that mean, and where should you start? We put together this checklist to help you get a better handle on prepping your finances for buying a home. 

Any changes you make will need time to have an impact, so give yourself at least 6 months to a year before you plan to buy a home to start checking things off this list.  

• Check your credit report 
  Your credit score impacts your ability to get a mortgage and what rate you’ll receive. UW Credit Union members can check their credit scores anytime for free in Web Branch,¹ as well as their full credit reports. Review your credit report to make sure all the information is correct and fix any mistakes.
• Improve your credits core 
  Two simple ways to keep your credit score in good shape are:
  • Avoid closing old credit cards
  • Pay bills on time
  Keeping old credit cards open and in good standing shows lenders you have a history of credit worthiness. Paying bills on time signals that you’re responsible and avoids any dings on your credit report due to late payments. To get a better handle on paying off your debts, start with the ones with the highest interest rate and then work your way down. You may want to consider consolidating your credit card balances to help pay your debt off faster.
• Avoid taking on new debt 
  Your debt-to-income ratio will affect how much you can afford to borrow for your home loan. If you want to get a mortgage soon, you should avoid taking on debt like auto loans,personal loans or racking up balances on your credit cards.
• Set your home buying budget
  If you haven’t yet, start saving funds now to cover your down payment and other associated costs when the time comes. One strategy that’s relatively simple is, when you pay off debt redirect the money that would have gone to paying that bill into savings. Consider getting prequalified to get an idea of what you can afford. If you need help making a down payment on your home, you may want to consider exploring down payment assistance programs that are available in your area. More homebuyers qualify for these programs than you may think!²
• Organize your financial documents
  When you apply for your mortgage or preapproval, you’ll need to provide a variety of information to verify your finances, including:
  • Recent paystubs 
  • Account statements
  • W-2s 
  • Tax returns for the past two years
  • Proof of any other income
  • Information on current debts.

If you want more guidance on how to prepare financially for buying a home, or have questions about the process, our mortgage team and financial specialists are here to help.  

Ready to buy? Get in touch with our local mortgage lending experts or get preapproved. 

Still researching? Explore our Mortgage Learning Center.