There are so many things to consider before deciding to finally purchase a home. Below are seven suggestions that can help you plan.
1. If you’re not necessarily planning on residing in the same location for at least a few years, then this probably is not a good time for you to invest in a residence. The transaction costs involved with the transfer of property are certainly not cheap, and so the shorter period you own your home, the greater your risk of losing money if you sell. This can happen even in a rising market, and is a lot more real in a declining market.
2. Before you begin looking for homes, get pre-approved. This will keep you from looking at properties that you can’t afford, and can put you in a position so that you can take action as soon as you find a home that may be ideal for you. Don’t confuse pre-approval with pre-qualification, as this is based on a less-thorough look at your financial situation. A mortgage company pre-approves you based on your real earnings, financial debt and credit rating. Your mortgage lender will be able to assist you with the next four suggestions directly below.
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3. Take a look at your credit history a minimum of three months (preferably six) before you are set to shop for your home. Your mortgage company will draw your credit report as part of the pre-approval process described above, and sometimes can work with you to recommend considerations that may help you correct any problems that you discover. This is why it is a good plan to complete your initial pre-approval many weeks ahead of when you believe you’ll be prepared to actually move.
4. Look for houses that you can really afford. After your lender pre-approves you, he or she will explain the absolute maximum purchase price for which you can obtain financing. However that’s not always the most helpful piece of information. A great lender will always ask you how much money that you are comfortable paying on a monthly basis, and then work that into the formula. It truly doesn’t make any difference if a loan merchant can pre-approve you to spend $600,000 if the most you’re comfortable shelling out per month is equal to the monthly payment on a $300,000 residence. And, really, you’re going to need to make that payment every single month. So we can not emphasize enough the value of this concept.
5. That old commonplace 20-percent downpayment is not always standard any longer. It’s true, the more money you put down on a residence, the less you will pay monthly. But there are numerous loan programs available these days that will require a smaller amount down, such as FHA mortgages, which simply need 3.5%. Your loan provider will tell you everything about the diverse programs and help you decide which loan is best for you.
6. When picking a mortgage, you’ll be able to determine whether you want to pay discount points to acquire a reduced interest rate. This is also called “buying down the rate.” If you intend to remain in the house for a long time (typically at least three to five years), it is usually preferable to pay the points. The reduced interest rate will save you lots of money during the lifetime of the mortgage loan.
7. Work with a a real estate advisor. While technology makes it a breeze to find houses on-line, most consumers are better off making use of a real estate agent. Most people merely buy one or 2 properties within their lifetime, and the home-buying process tends to be tricky. A good REALTOR will be involved in the sale of multiple residences per month. He or she will be able to advise you and bargain on your behalf throughout the exchange. And, your real estate agent’s compensation is paid by the seller, via the listing broker.
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