5 financial moves homebuyers should make this spring

The spring homebuying season tends to see a spike in activity that lasts well into summer. But with inflation rising again and Federal Reserve activity at a standstill with mortgage rates, potential homebuyers have their work cut out for them. 

If you’re planning on buying a house over the next few months, it’s key to prepare for what’s likely going to be the largest expense of your life. We spoke with financial and mortgage industry professionals to determine the top five money moves to make this spring homebuying season.

Start by seeing what mortgage interest rate you’d be eligible for here.

5 financial moves homebuyers should make this spring

Ready to start the homebuying process? These five moves can help make it simpler and less expensive:

Don’t make major financial changes 

If you’re looking to take part in the spring homebuying season, hold off on making any major financial changes right now. 

“Do not apply for anything, any change in debt to income could be catastrophic to your approval. Do not make any major financial changes, employment, money movements, etc., without consulting your lender first,” says Corey Vandenberg, mortgage loan officer at Lake State Mortgage.

In the home loan lending process, your finances, credit score, and debt-to-income (DTI) ratio are under a microscope. Applying for new credit and your credit utilization both impact your credit score. While searching for the lowest interest rates, that’s not something you want to mess with. 

Additionally, lenders typically want prospective homebuyers to have a DTI below 36%. But you may be able to squeeze by up to 43%. The key is to keep this number low and not add more debt to the equation. 

Explore your current mortgage options here now to learn more.

Save for additional expenses beyond the down payment

Getting your own piece of real estate requires a substantial amount of money. While you’re probably aware of down payment requirements, start preparing now for the additional expenses you might not think of that come along when you buy a home. 

“The down payment is what most people think of, but there are lots of other things that drain financial resources when buying a home, such as appraisals, inspections, title insurance, and lender fees,” says Nathan Mueller, certified financial planner and founder of BlackBird Finance.

Mueller also suggests saving $1,000 to $5,000 for home renovations, as you likely want to make the place your own. 

Grace Wilkins Maxwell, broker and owner at Canter Financial LLC, suggests not only shopping for mortgage interest rates but also comparing total fees and closing costs. Additionally, discuss with your lender how long you plan on keeping the property. 

“Frequently, the lowest advertised rates have such high fees that the borrower will not save enough in interest to offset them for 5+ years. If you plan to sell or refinance before then, that lower rate will cost you more,” says Wilkins Maxwell.

Check out homebuying programs and incentives 

The real estate market is tough to break into with low inventory, high mortgage rates and even higher home prices. To help defray the costs, don’t overlook special programs and incentives that could help you when buying a home. 

Vandenberg suggests talking to your loan officer to see if down payment assistance or first-time homebuyer loan programs are available in your area. 

Wilkins Maxwell encourages homebuyers to look into property tax abatement programs in the city or county where they are purchasing. “I have had several clients who qualified to have these taxes waived, to the tune of hundreds of dollars per month, who had no idea and would never have applied,” says Wilkins Maxwell.

Get a mortgage preapproval 

If you’re serious about buying a house this spring, Lawrence Sprung, certified financial planner, founder and wealth advisor at Mitlin Financial, suggests getting a mortgage preapproval. 

“You don’t want to go shopping for homes in a certain price range and then find out that you’re not going to get approved for that level of mortgage,” says Sprung.

Sprung also recommends homebuyers account for potential private mortgage insurance (PMI) costs if they don’t have 20% for a down payment. That, along with potential costs for repairs and maintenance, could easily get you out of your desired monthly budget. 

Vandenberg recommends starting the process early. “You can’t find a home you like, buy it without any work on your part, etc. when you are asking for a mortgage loan. The analogy we use is your wallet, you wouldn’t go shopping when you don’t have a wallet. You shouldn’t be looking at homes if you don’t know you are preapproved and ready to buy,” says Vandenberg. 

Get started with the preapproval process now.

Buy the right insurance coverage

When buying a home, it’s not just homeowners insurance you need to think about. Considering you’re making a major investment, you want to protect your finances, property, and family for the unexpected. 

“Make sure you have life insurance, especially if you have a family, just in case something happens to you shortly after purchasing the property, you can ensure that the property can be paid efficiently,” says Kelsey Wilson, certified financial planner and founder of wealth management firm BlackLines Financial. 

Wilson also recommends disability insurance for similar reasons, so if you’re unable to work, you have some financial assistance to cover mortgage payments. 

The bottom line 

Purchasing a home is a major decision and one that has a significant impact on your finances. Doing your research and preparing ahead of time can put you in a better position when it’s time to get a home loan and make an offer. That way, you know what you can afford and have the savings and resources available to jump on an opportunity.