Attention Homebuyers: 4 Essential Tips You Cannot Ignore

Written by Posted On Tuesday, 10 July 2018 09:39

You’re ready to purchase your first home. Congratulations! Now, to go about the process. Your family and friends have unintentionally instilled tremendous fear in you. For years, you have listened to horror stories of haggling with home sellers and purchasing money pits. It doesn’t have to be this way, however, so breathe. As long as you have your ducks in a row, the home-buying process is less stressful than you might think. Here are four tips to help you get into your new home without a hitch.

 

1. Credit Worthiness

 

The worst thing you could do is get into a mortgage you cannot afford, and one surefire way to do so is to take out a home loan with poor credit. Do you remember The Great Recession 10 years ago? Do you know why that happened? It happened because banks issued high-interest mortgages to people who couldn’t afford them, and you want to make certain this doesn’t happen to you. Check your credit first before you begin to shop for a new home. Unless you have a high score, you may find yourself in a loan with high interest that will get you upside-down in your mortgage quicker than you realize.

 

2. Double-Check Your Budget

 

Can you really afford to buy a home? Even if your credit score is the envy of all around you, what does your monthly budget say about your finances? Sit down with your income and expenses and take a hard look at how much money you have leftover each month. If things are tight, it might be wise to wait awhile before you buy a home. Yes, rent is a waste of money, but unless you can get into a home with a mortgage payment that is equal to or less than your rent, you might bite off more than you can chew. Don’t forget, you’ll have all the expenses related to ownership, too, including homeowners insurance.

 

3. Act As a Lender

 

In fact, take tips one and two further, sit down, and act as your own lender. If you were the mortgage broker and you came to apply for a loan, would you approve yourself? Gather all the paperwork required for the mortgage application, including proof of income and current expenses, and then do the math. Use an online calculator to help you figure out your debt-to-income ratio. Your monthly housing expenses should not be more than 28 percent of your gross income. If they are, you won’t qualify for a home loan. Your car loan, credit card, and other expenses should not be more than 36 percent.

 

4. Calculate Your Down Payment

 

Finally, your down payment will directly affect how much your monthly mortgage payments will be, so even though it might be tempting to put down as little as possible, this isn’t always a wise approach. Look into programs that will help you qualify for a better home loan first, such as a  first-time buyer or veterans programs, then, figure out how much you can put down comfortably. You might find a program that will tack money onto your down payment, which is tremendously helpful and reduces your monthly mortgage payments. Put down as much as you can to get a head start on paying off your mortgage.

 

The bottom line is to be prepared. Make sure you will qualify for a home loan first and then determine what you can afford realistically. Establish a home-buying and home-ownership budget and do not go beyond that. This puts you in control of your home-buying process and gives you the upper hand when it’s time to contact a real estate agent to begin your search. When you have your ducks in a row, it will be easy to find your dream home, finance it, and move. Well, maybe not the move in part!

Rate this item
(0 votes)

Realty Times

From buying and selling advice for consumers to money-making tips for Agents, our content, updated daily, has made Realty Times® a must-read, and see, for anyone involved in Real Estate.

Joomla! Debug Console

Session

Profile Information

Memory Usage

Database Queries