People who want to make a shift to their status from renters to homeowners should start to begin their preparations for a financial and emotional adventure. Before buying a home it is extremely important to make sure that one should live there for 3 to 5 years or longer, so that the equity in the home could be built up and investment costs can be recouped.
Everybody has a dream house and dream neighborhood in their mind but it might be required to shift from the dreams to find a home and community that is easily affordable. Home prices have drastically fallen over the last few years and interest rates are at low levels. Thus, buying a home this time might definitely prove much more affordable.
The following tips are great way to start with the process of home buying:
- Checking the Credit Score – Mortgage qualifications are determined by lenders on several factors like assets and income, savings pattern, ratio of debt-to-income and job stability. But the vital factor nowadays is the credit score. Interest rates are tied to the credit score which means that people who have credit score of 720 or 740 are more likely to pay low mortgage rates. Those with credit score of 620 or below cannot qualify for mortgage until the score is improved.
- Setting Up the Housing Budget – Even though lenders assist people to estimate how much they can borrow, it is essential that a potential homeowner creates an easy budget with spending and income to get some idea of the affordability regarding housing payments. Another important thing to consider is to keep one percent of home price for maintenance costs and homeowner association fees.
- Spend Less and Save More – After getting an idea of mortgage payment; it is advisable to save the difference between current rent and the payment every month.
- Meeting a Lender – It is better to get pre-qualified for mortgage loan before deciding on a house that cannot be afforded. The loan options should be well explored and it is better to get an idea regarding the amount required for down payment as well as closing costs.
- Get Hold of Some Reputable Realtor – Realtors not only represent the interest of the buyers but help them recognize the value of different neighborhoods and homes. The realtor should be knowledgeable, experienced familiar with the place where the potential homeowner wants to live.
- Narrow Down the Priorities – It is essential to decide which is the favorable option; living in a specific kind of home or a specific neighborhood. Compromises need to be made in case it is hard to afford everything in a new home.
- Choosing the Neighborhood – During housing downturns a few neighborhoods manage to cling on to their value. It is best to work with some realtor who can find a suitable neighborhood.
- Present Some Reasonable Offer – People who do not want to lose a house they love should make an offer that is reasonable. A few sellers might negotiate while others might not. Only a trustworthy realtor can help in the process so that a fair deal is made.
- Opt for Home Inspection – It is always good to have the home thoroughly inspected. A lot of knowledge can be gained regarding home maintenance, replacing or repairing systems and appliances within the house.
- Finalizing the Deal – After signing of the contract, it is necessary to stay in touch with the realtor and the lender so that insurance needs and financing is well taken care of in a proper manner.
Author often contribute real estate articles to many real estate communities. He is a merrick ny real estate consultant and help many novices buyers finding and buying new homes.