The process of buying a home requires dedication, time, and close attention to many different aspects of your finances. These factors will improve your eligibility for mortgage loans at the best rates, and open up substantially more housing options. As you’re preparing to buy your new home, you’ll need to keep these elements and more in mind, so here are a few key tips to be aware of as you begin this new chapter in life.
- Be Familiar With Your Credit Score
Having a low credit score will make it incredibly difficult to be deemed eligible for a mortgage loan, much less, one with a good interest rate. Give yourself time to dispute any errors on your report and pay down any debts that may be lowering your score.
- Prioritize the Needs for Home Over the Wants
Don’t get too caught up in what you want for your home before you have established what exactly you need in the structure, design, and location of it. As you go house-hunting, establish your budget by determining what elements can and cannot be compromised.
- Save for a 20% Down Payment
The deposit is more important than most people realize. The size of your deposit has a direct influence on how much your monthly payment will be, and signals your financial security and preparedness to lenders. A 20% down payment will also save you from having to purchase private mortgage insurance as well.
- Be Realistic
When setting your budget, remind yourself that this is only your first home. Though you should only purchase the house you feel strongly about, you must realize that you are most likely to find a home that meets most – not all – of your criteria, so compromises will have to be made.
- Stick to Your Budget
Compromising your budget is a slippery slope. You may find homes that catch your eye but are just a little too pricey for what you had planned. Since you never know what could come up financially, it is best that you stick to your original budget at all times.
- Get Pre-Approved
Once you have a clearer idea of the home you wish to buy and have established a budget, get pre-approved for a loan. This will help you to determine a final spending limit. (Note: You must get pre-approved, not pre-qualified!)
- Get Familiar With the Hidden Costs
Many first-time buyers are caught off guard by the many hidden costs that come along with the home buying process. Generally, you should include an additional 1% of the home price to your budget for covering repairs, utilities, and general maintenance.
- Have Your Home Inspected
Not all homes are made equal. You never know if any structural components were not built to code or simply if there was a mistake during construction. Have your home inspected to ensure your safety and avoid costly repairs later down the road.
- Work With a Good Mortgage Professional
The home-buying process can be overwhelming at times. Having a qualified mortgage professional by your side will help to ease your stress and protect you from predatory lending practices. Get in contact with a mortgage professional today to get your home-buying journey underway.