Today we’re going to talk about whether to buy a home and how to do it. Number one: credit check yourself before you wreck yourself. Knowing your credit score is important before making any large purchase. Basically the bank you choose for your mortgage will pull your credit score/report when you go to inquire about alone.
The lower your credit score the more of a risk you are and the more interest you’ll have to pay. If you check beforehand and see that your report is in rough shape maybe work on repairing your score before applying for a mortgage.
Number two: determine your budget. How much can you or do you want to spend on a house. There are a few different ways to determine this. First you should ask your mortgage lender for a pre-approval letter. This will tell you the maximum the bank is willing to lend you based on your income, your other current debt and your credit history.
But just because the bank will give you a certain amount of money doesn’t mean you should spend the full amount. After all it never hurts to have a little extra scratch for the Disney World trip jar. Not only will this cut down on your mortgage payment, it’s also typically cheaper to maintain and pay taxes on a smaller house.
General rule of thumb a buy a house that costs no more than three times your annual salary. So if you make fifty thousand a year you should be looking at houses at around one hundred and fifty thousand.
Number three is stack up your savings if you’re planning on purchasing a house you’re supposed to put down no less than 20%. So that house that we were just talking about the cost one hundred fifty K you’re expected to put down thirty thousand in cash.
Now banks have come up with loans that require less than 20% down. These loans however carry a penalty called private mortgage insurance which can be quite pricey in the long run. Also think of the other costs, moving costs furniture fees for hooking up utilities so having a financial cushion equals a plus plus ten out of ten would recommend.
Number four: time to find a home before diving into your home search you should probably find a realtor or real estate agent first. Someone who can help you navigate the housing market and who can answer questions that come up during your search.
A quick search online can bring you Realtors or agents in your area or if you have friends who have recently purchased a home you can ask them if they have any recommendations. Your home search can start on the interwebs too.
Many sites show listings available in your area and also include pictures details about the home and the listing price. You’ll usually also find a mortgage estimator on these sites which can tell you roughly what your monthly mortgage payment.
Would be once you’ve narrowed down the hunt you can visit houses with your wheel tur or agents. Pro tip consider bringing a video camera to make a little walking tour of the house so you can remember what it felt like to be in that particular home.
Number five: once you’ve found the perfect house it’s time to make an offer. Your representatives should be able to give you an idea of the fair market value for the house. That you want prices are negotiable but realize that most sellers have done the research you’ve done and know what their home is worth.
Number six: you and the seller reach an agreement you’ll enter into a contract to buy the house. When you enter a contract usually pay some earnest money to show that you’re serious. This is also when you’ll finalize your loan with the mortgage lender.
The bank will almost always do an appraisal so they’ll know exactly how much the property is worth. They’ll then be able to tell you what your closing costs and down payment will be. From the time you sign your contract you’re 30 to 60 days out from spending the first night in your new.
It does make the dream work during this period you’ll need to arrange an inspection to make sure there are no problems with the house or the property. You’ll also likely need to provide your lender with a ton of paperwork to prove that you really can pay for this thing.
Number seven: it’s closing time so get ready to sit in an office for an hour too and sign lots a documents. Closing is also when you pay your down payment and closing costs. When all the paperwork is done and money has exchanged hands you get your keys and the house is yours
That’s all we’ve got for you today. If you have any tips on home ownership we would love to hear from you in the comment section below.