6 Guidelines To Making a Smart Home Purchase
Buying a home for the first time is a huge financial step. The amount of debt that is being taken on can be overwhelming to a buyer who has not planned a home purchase . Any buyer that has a good understanding of their credit score and financial standing is going to have a much better time.
A good down payment, accompanied by a large savings account, can make it much easier to get pre-approved to buy a dream home.
Credit
A person’s credit score is going to be a huge factor in if they are able to receive a loan and what interest rate they will pay. The better the score, the less the mortgage payments will be and the lower the interest rate. It is possible to get a mortgage with a low credit score, but it will end up costing the buyer more money in the long run. It is better to build great credit and then talk to a lender.
Budgeting
Concentrating on an appropriate price range can help narrow down what houses to look at. For most lenders, they prefer a house payment be less than twenty-eight percent of the gross monthly income. This makes the lenders feel more comfortable since there is more than enough money to pay back the loan. It is vital for anyone looking to get a mortgage to have an in-depth understanding of where their money is going. This will make adding a large debt much smoother.
Down Payment
The bigger the down payment, the less money there is to borrow. Most loans ask for at least three percent and up to twenty percent down. The more money put towards a down payment, the better. If too little money is put down, private mortgage insurance will be needed until the mortgage is for less than eighty percent of the home’s assessed value.
Savings
While it is important to have a large down payment, it is even more important to have a healthy savings account. A lender will want to do business with someone who has a large savings account versus someone who is barely paying their bills each month. If there is no money in a person’s savings, the lender will be concerned that the mortgage payment may not be kept up to date.
Pre-Approval
Before looking at any properties, getting pre-approved is a must. This is a step many first time homeowners skip and they regret it later on. A pre-approval will let any realtor know that the buyer is able to make an offer and walk away with a solid deal. Someone that is guessing if they can get money is not likely to make a purchase. Many people are shocked by how long getting approved can take. Their dream home that was found is typically purchased by someone who has already been approved.
Make a Smart Home Purchase
There is a thin line between not settling for a house that is not good enough, and not waiting for the perfect house to come along. There is no perfect house, unless the homeowner builds it themselves. There will always be a few aspects a person dislikes in a house. That being said, no homeowner should compromise one of their must-have items to make a purchase.
If a home purchase compromises on anything the owner thought they would absolutely need, they will end up disliking their decision. Location and size of the home are two areas to avoid compromise. A house cannot be moved to a different part of town, and selling to move down the road will cost even more money.
When trying to make a home purchase, there are many mistakes that people tend to make. The number one mistake is not getting pre-approved. Any potential homeowner should take control of their finances, learn their credit score, and start putting away as much money as possible. This is going to allow them to make a purchase of a house that they love.