You’ve decided it’s time to lay down roots and are taking the first steps toward buying a house. No matter where you are hoping to buy, there are some things to keep in mind. These tips will make the home buying process go a lot more smoothly for you, the lender and your real estate agent.
Check up on your credit
The higher your score, the better the interest rate on your mortgage will be. Before you start to look at houses, take a peek at your credit history and score. If it’s on the low side, you might want to put off buying a house until you can bring it up. You can bring your credit score up by making payments on current loans on time, by avoiding opening new lines of credit in the months before you apply for a mortgage and by not spending too much on your credit cards.
Save for more than just the down payment
You might not need to have 20 percent of the value of the house as a down payment, especially if you are a first time homebuyer, but you do want to save for closing costs. It’s also a good idea to set aside some money for maintenance on the property and for any surprises that can crop up, such as a heater that gives out after a month of use. According to Bankrate, it’s a good idea to have up to 3 percent of the value of the home tucked away for upkeep issues and emergencies.
Get prequalified first
Before you start making a list of what you want in a home or looking at properties, you should get prequalified for a mortgage. The prequalification process will give you an idea of the type of interest rate you’ll get on a mortgage as well as how large of a loan you can realistically expect to receive. When you go through the prequalification process, you aren’t committing to working with a lender. Prequalification sends a signal to the lender and to your agent that you’re serious about buying.
Know what you want in a house
Once you know how much mortgage you can afford, you can start to make a list of the things you want in a home based on the average cost of a home in your area. For example, you might be able to afford a two-bedroom home without a large yard. If you want the yard, you might have to wait until your finances change.
Do some digging
Play investigator when you do find a home you’re interested in. Talk to the neighbors to get a feel for the area. Find out if the home had any major repairs or issues over the years.
Remember that buying a house is an investment. Take your time and jump into the process only when you feel ready.
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