Thinking about buying a home but unsure about how to prep for it financially? A financial health check, or looking into the required documents can be both daunting and exhausting.
Despite how taxing it can be, it’s important to know what exactly you need to do. Buying a house isn’t a small decision. So, you need to prep accordingly as well.
Here are 10 points that Flyhomes suggests to dig into for a complete checkup of your financial health.
Quick note: While each bullet point here is listed with information, note that your personal bullet points might be different. Its important to know that you have everything that covers these 10 points mentioned below.
Income
Grab your current monthly income from your bank account, or fetch last year’s W-2, or 1040 and Schedule C (for those who are self-employed). This’ll help you clearly see the comparison between what’s coming in versus what’s going out.
- ACH income deposit
- Recent pay stubs
- Previous year’s W-2, or 1040 and Schedule C
Bank statements
Pull together your most recent statements from your bank accounts, including checking and savings if you have both. You’ll use these mainly to identify how you’re doing on building an emergency fund and saving toward long-term goals.
- Most recent savings statement
- Most recent checking statement
Monthly expenses
From personal and household to business and future planning, having your monthly expense numbers ready for your financial check-up is one of the most important steps.
These costs come out of your account every month, and give you an in-depth look into where you can cut recurring expenses, save money, and improve your financial situation.
Make a list of monthly expenses and amounts, including the following and anything else that you regularly pay for.
- Mortgage or rent payments
- Expenses for dependents (children, parents, pets)
- Insurance premiums (health and health savings account, auto, life)
- Loans (student, auto, other)
- Debit/credit card statements
- Retirement savings
- Utility bills (water, power, internet, cable, subscription streaming services, phone)
- Recurring payments (gym, autopay items, apps, memberships, charitable donations)
- Entertainment (restaurants and takeout, events, shopping)
- Groceries
- Gas
Extra financial accounts
These days, there are lots of tools (such as Venmo and Apple Pay) to pay for items or chip in with your friends. Pockets of money may be hidden in these accounts! Looking at them may also help you remember some of your entertainment costs or other expenses.
- Balances in Venmo, PayPal, Zelle, Apple Pay, Google Pay, Stripe, etc
Debt
How much debt you’re holding onto matters for seeing the full scope of what’s going on with your money. Whether it’s consolidating credit card debt, looking into lower interest rates, or how well you’re doing with paying down debt, gather these items to see how well your debt-to-income ratio is doing.
- Mortgage balance
- Credit card balance
- Loans (student, auto, other)
- Overdraft or late fees incurred
Retirement and Investment Accounts
Have you had a chance to check in on whether you’re maxing out retirement contributions? Did any market changes affect your stock portfolio? Reviewing your retirement and investment accounts during your checkup will show you if your timelines, gains, and performance still match your expectations.
- 401k or Solo 401k statement
- Roth or Traditional IRA statement
- Stock statements
- Real estate or company investments
- Pension statement
Credit score
Your credit score affects your interest rate when you get a loan, and whether you qualify for a loan in the first place. When you find out the number, you can decide if you need to improve your score.
- Get your credit score from your bank or a service such as Credit Karma, Credit Sesame, or Mint
Insurance policies
Although you may not pay insurance premiums monthly, your financial checkup gives you a good opportunity to compare your current policies to competitor rates to see if you could lower your fee. Do you still need that type of coverage for that amount, and can any savings benefit your financial future?
Pull your premium information for these and any other insurance policies you hold:
- Health
- Auto
- Life
- Disability
- Homeowners or renters
- Valuable property
- Business
Tax Returns
Use your tax return from last year to see how much you paid in taxes or the amount of refund that was kicked back. This’ll help you create mock tax return numbers to show you what you can expect for the upcoming year and where you may find new deductions.
- Last year’s tax return
- Mock tax return estimate
Things you can sell
Looking for ways to bolster your savings is part of a financial checkup. So now’s the time to think about what items you might be willing to part with for a financial boost. Think especially about items you pay to keep up.
- Make a list of things you can sell
It’s always important to know what you need when it comes to getting a financial check up, especially when it comes to buying a house. If you have any further doubts or questions, you can always get in touch with the Flyhomes team. Our experts are here to help you!