Steps To Take Before Buying a Home
Homeownership today is more than just buying a home. You must make sure you can keep the home over the long term. Consider the following tips if you are thinking about buying a home, and obtaining affordable financing as a long-term success.
Getting educated on the loan process and key factors to different types of loans before hiring an agent will ensure you get an affordable loan. Some loan types include fixed-rate mortgages, adjustable-rate mortgages, FHA and VA loans along with discount points, appraisals, and real estate agent commissions.
Today it is more important than ever to get your finances in order. Begin by getting a copy of your credit report, including your credit score. If your credit score is below 620 you must take the time to improve it. If there are any errors on the report, you must correct them. Creditors look for a two-year history of consistent, on-time bill payment to establish good credit.
Establishing a budget is important to give you an idea of the type of home you can afford. Lenders will evaluate all your debts and take into account your full financial situation when qualifying you for a mortgage. A key factor is how much income you bring in versus how much you will pay out each month
Having a savings account in reserve helps ensure you can afford the upfront costs of homeownership, including a down payment of 5% to 20% of the purchase price, deposit of 2% of the purchase price, and closing costs of 3% to 5% of the purchase price.
In today’s competitive market, home buyers should get pre-approved for a mortgage before they begin their house hunt. Getting pre-approved for a loan, involves your lender obtaining information about your job, assets, income, and debts and then determine how much financing you’re qualified to receive. Once you are ready to make an offer on a home, this pre-approval letter will tell the seller you’re a serious and qualified buyer.