Homes are typically the largest purchases any individual will ever make, making it of the utmost importance to put some serious legwork in before you decide to buy. And while getting a good inspection, making sure you like the neighborhood and getting to know the local school district can all serve you well in the long run, the best thing you can do when you’re getting ready to buy a home is getting your finances in order. While it may seem like a daunting prospect at first, figuring out your financial life with the help of the right online tools can help you secure the best mortgage rate, save for a down payment, and enjoy the home of your dreams for the foreseeable future. Here’s how:
Try an online mortgage calculator: While it’s nice to imagine that we’ll all have the kind of cash saved to land ourselves a posh pad, like the luxury homes at The Astor in Manhattan, it’s worthwhile to have a reasonable mortgage budget in mind before you start calling realtors. An easy way to figure out how much house you can reasonably afford is by using an online mortgage calculator, like the ones from Bankrate and NerdWallet, which take into account things like your salary, your outstanding debts, and how much you have saved for a down payment to give you an accurate picture of what your mortgage liability could look like going forward.
Compare interest rates: When you buy is nearly as important as where you buy. If you want to ensure that you’re not overpaying for your property, it’s important to monitor mortgage interest rates for at least a few weeks (but preferably longer) and jumps on any particularly fortuitous breaks. Luckily, Wells Fargo’s easy-to-use tool takes all the guesswork out of the equation.
Check a buy versus rent comparison: While you might believe that buying will always be cheaper (or at least worth the money in the long run), that’s not always the case. Using a tool like Zillow’s Rent vs. Buy Calculator, you can discover which will end up paying dividends over time. You should also consider factors like commuting cost and quality of life—for example, if you work in Midtown, keeping a home in Montclair may be cheaper at first, but when you factor in how much time you’ll be spending commuting, how much that will cost, and how little free time you’ll end up with, a home close to work, like one of the luxury apartments at The Bryant, might just suit you better.
Use automatic debits to save for your down payment: Saving enough for a down payment—typically around 20 percent of the home’s total cost—can be difficult even for the most stalwart savers. If you want to make it easier on yourself, set up automatic debits from your bank account—you won’t even notice the money is gone and you’ll have a nice little nest egg before you know it.
Leverage a brokerage account to get some serious savings: If you really want to make your money work for you, try moving your portfolio into a brokerage account, like one of the ones managed by Charles Schwab. Easy to use, entirely digital, and great for growing your cash fast, a brokerage account can yield some serious dividends, making it easier to find yourself flush and ready to buy in no time.
Whether you’re buying a condo in Manhattan or a farmhouse in the country, the right mortgage tools can make all the difference when you’re ready to sign on the dotted line. Before you even start your search, make sure you’ve got your financial house in order and you’ll be enjoying the comforts of your new home before you know it.