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New Year, New Home

VP Sharon McHale

Happy New Year! As we welcome in 2017, it's a good time to take stock and start fresh. Most people hit the gym, put the brakes on spending and declutter. If your resolution is to move to a new place this new year, answering these key questions can help put you in the right home:

Is renting or buying best for you? Deciding whether to rent or buy is a personal decision that depends on your financial situation, future plans and lifestyle. Both options have benefits that you need to carefully consider before making your decision. For many, renting could be ideal for your lifestyle if you want a home that's maintenance free and provides more flexibility to move. Buying may make sense if you plan to stay in your home for at least five to seven years and are interested in building long-term equity.

Is your financial house in order? And that starts with credit. For potential renters, many landlords will look at your credit to assess if you will pay on time, and good credit is also key to getting a mortgage at a reasonable interest rate. Good credit takes discipline and planning. If it's been more than a year, find out your credit score. You can improve your credit by paying your bills on time, working with a no-fees housing counselor and beefing up your credit literacy. If you don't have credit, work to establish it independently by opening up checking/savings accounts and using credit cards carefully.

If you're buying and financing your home, getting pre-approved for a mortgage is a good idea. Work with your lender to get pre-approved before you begin house hunting – this can help you make an offer faster and with more confidence.

Do you know how much you can afford? One of the first steps is getting a handle on your finances. While it's not nearly as fun as looking at homes, it's important to help you understand how much you can afford. What do you earn? What do you spend? How much do you have in savings? Answering these questions will help you learn whether you are financially ready for a lease or a mortgage. Make a budget and use free online tools and calculators to determine how much you can afford.

Do you have enough saved for a security deposit or down payment? Whether you're moving into an apartment or buying a house, you'll need some savings to make it happen. If you've decided to rent, you may need to put down a security deposit and pay one or two months of rent up front. These costs can equal up to four months of rent.

As for down payments, today's borrowers can get a conforming, conventional mortgage with a down payment of as little as five percent. Most homebuyers are putting down between five and ten percent. And some products, such as our Home Possible AdvantageSM mortgage, require a down payment as little as three percent. Remember, you have choices when it comes to your down payment so talk to your lender about what makes the most sense for you.

Answering these questions can help you build the savings and financial savvy to act on your resolution to move into a new home this year.

Visit My Home by Freddie Mac to get started. And follow our New Year, New Home blog series for information, tips and tools on buying and renting.


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