Perhaps the most significant that anyone will make in their life is buying a new home. Because it’s a massive investment, you should do adequate preparation and research. You can also explore the floor plan renderings of the house to feel and visualize the property. You should never buy a home or property on a whim! So, you need to make yourself “Home Buying Ready”.
Follow these simple tips to get yourself ready for buying a new home.
1# Get A Higher Credit Score Before Buying A New Home
The higher your credit score, the better the deal you can bag.
If you have a credit score below 660 or 680 you will be required to pay sizable fees or a higher down payment.
Conversely, a score of 700 to 720 gets you a good deal and 750+ gets the best market rates
You should get your credit reports and scan for dings from old, paid or settled debts.
Also, you will want to stop applying for new credit a year before you apply for a mortgage.
Do not, I repeat do not apply for any new credit until after you close on your home.
2# Know Your Budget – And Stick To It
Determine what your budget is for buying a home.
FHA loans stipulate that your monthly payment can’t exceed 31 percent of your monthly income.
Conventional loans, on the other hand, require that a home expense should not exceed 28 percent of your gross monthly income.
Use an online calculator to figure out how much house is within your budget. You will also want to account for other housing expenses, such as taxes, insurance, and utilities.
3# Sock Away Your Down Payment And House Closing Costs
It is a smart idea to save between 3 percent and 20 percent of the home purchase price for a down payment.
How much you will need to pool will depend on your credit history and loan terms.
Big down payments can be difficult but there is sometimes down-payment assistance available.
You can search online with keywords like “down payment assistance,” “first-time homebuyers” or “homebuyer’s assistance.”You can also narrow your search by city or state.
If you are lucky enough to be in a buyer’s market, you may be able to negotiate to have the seller pay a portion or all of your closing costs.
4# Make Sure Your Savings Account Is Up To Snuff
As a home buyer, you need to have a healthy savings account.
Lenders are more likely to give you money if you are living paycheck to paycheck.
Try to get three to five months’ worth of mortgage payments set aside. This makes you more attractive to lenders.
Your savings can help pay for maintenance and repairs of the home. You will want an emergency fund if costly things like roofing need repairing.
Assume around 2.5 to 3 percent of your home’s value each year on upkeep and repairs.
5# Get A Mortgage Pre-Approval
Get financing in order before you shop around seriously for a new home.
This will help you know what you can afford and help the process go much smoother.
6# Make Sure To Purchase The Right Home
Home ownership can get very expensive if you are only in the house for a short period of time.
Expenses can add up depending on factors like –
- How much you put down
- The cost of selling your old house
- Moving costs
Take your time with a purchase and you will get a home that will make you happy.
You should make absolutely certain the house you’re considering is one that will fit the needs of you and your family as well as your budget.
7# What You Should Do When Buying A New Home
Treat home buying seriously and do the work of researching and getting your finances in order.
The more prepared you are, the smoother things will go and the faster you will be a new homeowner!