Are you planning to buy a house this year? If yes, then we’ll help you out. We admit that it is a huge commitment. If this is your first home purchase, you need to know many things such as the budget you need, the home loan rates today and other related factors. Let’s take a look at it.
Figure Out Your Budget
A home purchase will cost you a huge chunk of your salary. Keep in mind other financial commitments. Seek out additional sources of income if you find your salary is not enough to buy you your dream home.
Set out a budget according to your income. Don’t set the limit too high. Don’t rely on reselling the house as markets crash without any prediction. Keep some money for emergency use; do not invest all of them in your new house.
Additionally, your lender might want to see your income as well as your work history. Some mortgage lenders check the debt-to-income ratio. It helps them decide how much you can pay the mortgage debt.
Using an online mortgage affordability calculator before meeting a mortgage lender will be helpful. Once you get to know the estimate, you can calculate your down payments and closing costs.
Decide Whether Your Investment Is Worth It
You should have the willingness to live in your house since you’ll be spending your bucks on it. Keep your family plans and career goals in your mind before investing in a new house.
Be clear about whether you want to live in the house or want to use it as a mere investment plan. If you wish to live there, select a location that has amenities near it. Ensure it has good schools and medical facilities around it. Also, look for easy transport options.
Start Saving for Your Down Payments
Nowadays, most mortgage problems necessitate a down payment. Federal Housing Administration (FHA) loans start from a minimum down payment of 3.5%. Conventional loans range between 3% to 5%.
You’ll also need to save for the closing costs. It’s the cost you need to pay to avail of the loan. It is roughly 2% to 5% of the total loan amount.
Decide The Right Kind of Mortgage for You
There are various kinds of loans – conventional loans, FHA loans, VA loans, to name a few. Home loan rates today vary with different kinds of loans.
The government doesn’t back conventional loans. A private lender mortgages conventional loan. Most of the mortgages of the U.S. are conventional loans.
The FHA loans are backed by the government. Thus, they are less risky.
VA loans don’t require down-payment and are for active-duty members of the Armed Forces.
Get Pre-Approved or Prequalified for A Mortgage
Your lender will apply for the pre-approval with you. You can show the pre-approval letter to the real estate agent. They’ll help you find homes according to your budget. This is a preliminary as well as a compulsory step.
Find A Good Real Estate Agent
Your real estate agent will help to communicate your demands with the multiple parties involved. They will assist you in negotiations, will show you more properties, to name a few. Thus, it is vital to choose the correct real estate agent. Take recommendations from your friends and family to find a good real estate agent. Additionally, read online reviews.