So you are finally ready to buy your first home? Great! There are a lot of factors to consider, but working with the right real estate agent can make all the difference.
Photo by Evelyn Paris on Unsplash
Before Purchasing Your First House..
..Here Is What You Need To Know:
Check Your Credit Score
Your credit score is one of the most critical factors when it comes to getting approved for financing with Zarwin Baum, especially if you want to get the best interest rate possible. A good credit score will help save you thousands in interest payments over time and give lenders more confidence that they’re loaning money out to someone who will repay them on time.
It’s estimated that around 50% of Americans have less than stellar credit scores. This may be because people tend not to pay their bills after graduating college, so it’s important to check your credit report before you start looking for a loan. If there are any issues with your credit report, you can dispute them and raise your score before buying a home.
Down Payment And Closing Costs
During the housing boom in 2001-2007, it was an average of 55% cheaper to buy than rent across the US. Since then, it seems that renting has become more popular than buying, with demand rising over the past year due to high prices and low inventory on the market.
Aside from checking out what houses are available, buyers should also consider how much money they have for a down payment. The average down payment in the US is around 20% of a home’s selling price, so it’s important to have this money saved up before you start looking for one. Remember, the more money you put down, the lower your monthly payments will be, which means you’ll save more over time.
Determine How Much You Can Afford
Lenders use something called the 28/36 rule to determine how much they’re willing to lend someone based on their income and outstanding debt. This means that lenders will work with homeowners who spend no more than 28% of their monthly gross income on home expenses and no more than 36% of their gross monthly income toward all debts, including housing costs, credit cards, student loans, and more.
If the 28/36 rule comes back with a higher number than you’d like to spend on housing expenses or debt, your real estate agent can help determine if there are any options that will work better for your budget. There are also loan programs available these days that offer lower down payments which means you can get into a home with less money saved up.
Get Preapproved For A Loan
Getting preapproved is one of the best ways to secure financing when buying a house because it shows sellers just how serious you are about purchasing their home. Plus, most lenders will provide buyers with an estimate of closing costs that’ll cover things such as insurance and taxes, so you don’t have to worry about coming up with cash at the last minute.
In Conclusion
Searching for a home is exciting and exhausting, which may make it easy to forget about things like closing costs and other expenses until you’re ready to write an offer on the house. To help avoid this, your real estate agent should be able to provide you with advice and guidance when it comes to financing, in addition to finding listings that match your criteria.
Thank you for reading!