Buying a home provides an opportunity for you to increase your wealth. Whether you’re searching for a home online or you’ve enlisted the services of a real estate agent, there’re some fundamental keys to success. Here are a few pointers to help you get started on your homebuying journey.
One of the first things that a lender looks at when you apply for a mortgage loan is your credit score. Many lenders will approve or deny your mortgage application according to their confidence in your ability to repay the loan. Therefore, it’s important for you to check your credit rating and your credit score before applying for a home loan.
Once a year, you can request a free copy of your credit report from Equifax, Experian and TransUnion. Knowing what’s on your credit reports will enable you to dispute any erroneous details, such as invalid addresses, inaccurate account balances or items that you don’t recognize.
A favorable credit profile could improve your ability to qualify for more attractive loan terms.
When you’re planning to buy a home, it’s a prudent idea to maintain low credit card balances. Emergencies and certain instances may require you to use your available credit. Remember that high-balance-to-limit ratios can negatively affect your credit score.
Taking a realistic approach toward buying your dream home could get you closer to reality. Knowing how much you can afford might prevent you from becoming cash poor via a home that exceeds your financial means.
Write down your monthly expenses such as your credit cards, phone bill, car insurance, groceries and other recurring bills. List your income and note how much you plan to contribute toward your down payment and closing costs. Think about interest rates, private mortgage insurance and loan programs based on your financial situation. Have all this information handy when you talk with your loan originator.
With a manageable plan, you can map out a strategy to save the money you’ll need to buy a home. After listing your current living expenses, it’s wise to save as much money as you can for your down payment and closing expenses. Your strategy could include additional ways to earn money, such as working more hours or selling things online that you don’t want.
Typically, you should plan to make a down payment that equals 3.5% of the property’s sales price and earmark at least another 2% of the sales price for closing costs.
If you or your spouse has served in the U.S. military or plan to purchase a home in a rural area, you may need substantially less money to buy a home. Your loan originator will provide a breakdown of the amount you’ll need to buy a home.
Make a list of items that you would like to have within close proximity of your home. Sharing these items, such as good schools, shopping, parks and other attractions with a real estate agent who is familiar with the area could help you find the perfect neighborhood.
If you are renting an apartment, a condo might provide you with a similar amount of living space. Although, you benefit from ownership of the unit versus paying a landlord for somewhere to live. Typically, condos are smaller than single-family homes, which may also mean less cleaning, lower utility costs and less maintenance overall.
These are just some of the ways you can prepare for your homebuying journey. Afterall, we want you to love your mortgage experience!
Ready to learn more? Contact an Envoy Mortgage loan originator to discuss which of our loan programs is right for your financial situation. To locate a mortgage loan originator near
you, click here.