Purchasing a home can be a confusing and lengthy process if you do not prepare for it and familiarize yourself with the home-buying process. There are few things that you should be doing to make the journey as smooth and quick as possible. Continue reading for more details.
How to shop for a home?
Shopping for a home can be both exciting and overwhelming. Knowing what to look for when you’re exploring your home-buying options will make the experience easier, more fun, and less intimidating.
- Determine your home buying budget. Besides your monthly mortgage payment, you may want to consider additional payments that come with owning a home. That can be home owner association (HOA) fees, homeowner’s insurance, property taxes, and utilities.
- Create a list. Your house hunt checklist should always start with your absolute must haves – things you cannot live without. Think about location, the number of bedrooms and bathrooms, the floor plan and other features. Then add in those things that would be nice-to-have like smart in-wall outlets throughout the home.
- Check homes in your area. Try websites and apps for the area you want to live in, this gives you an idea of the current prices of homes in your market. You will be able to compare your budget with the price of the houses in your area.
What do I need to shop for a home?
Good credit score
The first thing you want to do is to check your credit score. If you have a low score or blemishes on your report, do your best to improve them prior to applying for a mortgage. Make on time payments for at least 12 consecutive months to show that you are able to make payments on your mortgage. Try making more than the minimum payment amounts to decrease high credit usage and high balances, this will help to increase your credit score. If there are any errors on your credit report then take the steps to have those corrected and/or removed. To help boost your credit, sometimes opening another credit line will help to boost your score even more.Try to get your score as close to 700 as possible to better your chances of getting a loan.
Low debt-to-income ratio
Your mortgage lender will want to know that you are currently financially capable of paying your monthly mortgage payments. This is why they routinely analyze debt-to-income(DTI) of applicants; you want your DTI to be lower than 43%. You can lower your DTI percentage by paying more towards your debt so you have a lower debt amount and/or increasing your income.
A decent down payment
When you close on a home, you will need to pay an upfront downpayment, this is usually a percentage of your home’s sale price. There are some mortgages that have lower down payment requirements than others, either way, it is a good idea to start saving for your house down payment.
Should I get a pre-approval?
Mortgage pre-approval letters have an expiration date on them, so it is important to get one when you are ready to purchase your home. Having a pre-approval letter may give you an edge in a crowded home buying market. We’re here whenever you’re ready to take the next step in your home buying journey.
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