Question: Ready to buy a home? – "Of course I am!" – Did you just say that with absolute conviction? If, like any sane buyer, you're preparing to buy a home and you're here to step up your game in real estate, let us provide you with a full list to ensure you are making the right purchase:
Preparing to Buy a Home Checklist and Tips
1. Calculate what you can afford
A beautiful house? Recently built? Great location? These may be your wishes, but think about them with a practical approach. Can you afford it with your current income? Zillow estimates that homebuyers spend, on average, nearly 15 to 20% of their income on mortgage payments on a typical housing unit.
With so many calculators available, you'll be in control of the debts, income and expenses that affect what you can afford. Try to play house before you bid and sign the papers. Take the hint if you are uncomfortable financially. Buy a home that you really like.
2. Listen to what your credit has to say
It doesn't matter if you are a beginner or a seasoned buyer. If you're like most of us, get your mortgage to buy the home.
In preparing the mortgage, it is recommended that you take the free copy of your credit report, read it, and have it cleaned up in the few months before you plan to go home hunting. This gives you plenty of time to correct incorrect reports and improve your scores.
While FHA-insured loans are an alternative if you don't have the perfect 3 numbers, the old rule about loan requirements still applies: you pay less if your credit score is higher, i.e. more than 680.
3. Small or large deposit
VA loans, which do not require a down payment, are an exception in this case. However, if you go for an FHA loan, a good score (> 580) only requires a 3.5% down payment to secure your property. The thing about paying a larger down payment is that a small mortgage is due. It also gives you greater choice when it comes to lenders; Some of them don't finance until you pay around 5-10% down payment.
However, before you hurry up, consider whether or not this will benefit your cause. It might not seem like a good idea to use the emergency or retirement funds for this if you still have unexpected repairs and no balance to support them.
(READ: Is it going to be an Open House of Value?)
4. Plan to stay in the field
In order to prepare for home buying, keeping up to date is also important and it really is a no-brainer. To know if you are ready to buy your home or not.
Do you think you can stay in the same place for some time year after year? Because if you can't or can't, you are losing more money with every transaction you make to buy quickly and eventually sell. And unless it could get worse, some people who practice this will have greater misfortune when market prices fall.
If you don't have a 10 year plan on hand and still want to push a deal forward, the best thing to do is to buy a home at a price that is below what you can easily afford.
After reading it, do you still think that you are ready to buy a home?