This Was the Smartest Move I Made Before Buying a Home

I'm writing this article from my new home office, in the house I just bought and moved into. Buying a home in 2024, amid higher mortgage rates than we've seen in several years and with a stubbornly low housing inventory (just 3.7 months' supply in May 2024, according to the National Association of Realtors) sure wasn't easy.

But there's one move that I absolutely credit this success to -- and if you can also do it before you start looking for a house to buy, you won't regret it. Save as much money as you can before starting the process -- here's why.

Save, save, and save some more

I started saving for a home in late 2022, and my original savings goal was $50,000. I managed to reach the target several months before I started looking for a home to buy in early 2024, but I didn't stop saving at that point.

Instead, I kept adding money to my high-yield savings account every week, knowing that even if I didn't end up needing extra for the house purchase itself (I did, in fact -- more on that below), that extra money would come in handy in other ways.

I was going to have to pay for a home appraisal, inspection, movers, and other bits and bobs along the way, and I knew that having the cash to cover that would result in a lot less stress for me.

I also wanted a solid emergency fund, because having emergency savings is even more crucial when you're a homeowner. Anything could break at any time, and it's on you to pay for repairs or replacements. I'm happy to report that thanks to my diligent saving, I have a real six-month emergency fund for the first time in my life -- which makes me feel a lot better about being a homeowner.

What can more cash in the bank do for you?

I can't come up with any situation in which you might regret having more money saved for an expensive endeavor. And since buying a home is likely the most expensive purchase the average person will ever make, the more you can save ahead of time, the better. Ultimately, having as much saved as possible gives you the gift of flexibility.

For me, I used that flexibility to buy a home that was move-in ready. After years of living in rentals with varying degrees of needed work, I wanted to feel as if the house I bought was actually updated and livable.

But once I got my mortgage pre-approval, hired a real estate agent, and started searching for a home, I discovered that my original estimate of how much I'd be spending for a house in such condition was less than it should have been. Thankfully, I was still saving money at this point, and when I found a place I wanted to buy, I felt comfortable making an offer at the top of my price range.

Extra saved cash can give you flexibility in another way, too. If you're less opposed to buying a fixer-upper home than I was, you'll have negotiating power with a seller. Let's say you're interested in a house but it needs a new roof. If you've got the money, you might be able to get a lower price from the seller in exchange for paying for that new roof out of your extra funds.

How else can you get ready to buy a house?

You already know that buying (and owning) a house is expensive, but other than trying to save as much as you can ahead of time, here are a few other areas to focus on in the lead up to making a successful offer on a home:

• Check out your credit score: Your credit score directly influences the mortgage rate you'll get, so digging into it ahead of time is crucial. You can likely view yours for free via an existing credit card or bank account -- just be sure it's your FICO® Score you're seeing, as it's used by the majority of lenders. A FICO® Score of 620 or better is generally required for a conventional loan, but the higher your score, the more you stand to save.
• Pay down debt: If you have high-interest debt, it's worth trying to get rid of it ahead of seriously looking into buying a home. And bonus -- paying off your credit cards will improve your credit score.
• Shop around for a mortgage: Different mortgage lenders have different rates and also different mortgage programs you could qualify for based on income or where you live. So aim to get pre-approvals from a small handful of lenders to see how much buying a home might cost you. As of this writing, the average mortgage rate for a 30-year fixed loan is 6.95%, per Freddie Mac -- but you could do better than this with the right lender.

Becoming a homeowner was a huge process with lots of steps along the way. I'm glad I gave myself lots of runway and time to save as much money as I could before taking the plunge -- do yourself the same favor if you can.