Your research should start with gauging the current real estate market. The real estate industry fluctuates significantly. Knowing if the market is a buyer’s market will set the tone for your homeownership. This research will give you an estimate of current mortgage rates and options, a first-time homeowner assistance program (if you fall in that category), and average selling prices in your location of choice. Location is everything. Research all of the benefits and amenities of where you intend to live because this will affect the price and your comfort. Consider city or suburb (if suburb distance from the city and if it matters), school district, security, access to reliable emergency healthcare, and family friendliness (if you’re a parent or intend on becoming one) This fundamental research will also help you cement the decision to buy a home. A home is a massive long-term contractual commitment in one location. Seriously consider your lifestyle preferences and your future aspirations.
To be realistic with your expectations, you must know your financial status. The first thing to do is a credit check. Most lenders will only consider you with a credit score of at least 640 to qualify for the majority of loans. A 720 or above will generally get you the very best loan options and terms. If your credit score is below 640, you need to enlist a professional credit repair agency to assist you in cleaning up your credit. Once your credit is clean, it’s time to get preapproved for a mortgage. Most buyers won’t even consider your offer without a preapproval letter, so it is vital to acquire one before you commence house hunting.
How Much House Can You Afford
Budgeting is a vital step. You must first calculate your debt-to-income ratio (DTI). This is the first thing lenders will calculate before even considering you as a viable mortgage candidate. Look at your current income versus your debts and determine how much money you can pay for a mortgage monthly. Your mortgage is 25% of your monthly salary. This amount should include principal, interest, property taxes, home insurance, private mortgage insurance (PMI)—and homeowners association (HOA) fees. Homeownership also includes constant maintenance. And apart from the costs listed above, buyers must remember that there are also closing costs ranging from 3-6% of property costs, and the property could also require additional work that is another spend. Fortunately, some lenders include the closing costs in the mortgage. Another cost to consider is your down payment. Your down payment ranges from 3-20% and is a one-time lump sum that lenders require as a contingency if you forfeit your mortgage. A bigger down payment yields better mortgages with lower monthly payments. A 20% down payment has the added value of removing private mortgage insurance (PMI) from your expenses. PMI is an added cost that does not contribute to paying off your balance.
Enlisting A Credible Realtor
You wouldn’t go to court without a lawyer, so why buy a house without a great realtor? Realtors are experts in real estate and will search for the options that best suit your needs and assist with negotiating the best cost and completing the closing paperwork efficiently. Enlist a realtor with years of expertise in residential properties, up-to-date with the latest market trends, and has a good reputation in the area you are buying.
Inspection And Appraisal
You and your realtor have house hunted, you found your dream house, and you made an offer. Have your realtor recommend a credible contractor to inspect and appraise this house. This is vital as it will reveal any severe structural damage that may have you opting out and getting a deposit refund or a price drop. An appraisal is necessary to determine the value of the property, which guarantees you not being overcharged. Your lending facility will also require a copy of the appraisal.
You have done all the hard work. Now it’s time to close the sale and open your door.
Don’t hesitate, to get your credit and budget consult today at Bryant Tax Logistics to properly prepare yourself for homeownership.
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