As what’s likely to be the biggest financial commitment you’ll ever make, it’s essential to be well-prepared before becoming a homeowner. A recent study found that nearly half of Gen Xers and two-thirds of Millennials reported having at least some remorse about buying their current home.
Buying a house for the first time is both exciting and stressful, but ensuring that you’re ready can help make the process smoother and limit the likelihood of regret.
Overall, if you are ready to take the plunge into homeownership, speak to a reputable mortgage broker to ensure that your needs are met. Highly experienced brokers are able to provide you with valuable advice and can assist you with stepping foot into the housing market.
Start Saving As Soon As Possible
You’ll need to come up with a lot of cash upfront when buying a home. While you might use a house payment calculator and determine that you can easily make the monthly mortgage payment, there’s a lot more to consider beyond that.
In most cases, with the exception of some VA and USDA loans, you’ll need a down payment. If it’s less than 20 percent, you’ll also have to pay for private mortgage insurance. Of course, 20 percent on a $300,000 home is $60,000, a significant amount of money to save.
If your credit is excellent, you might be able to pay as little as 3 percent down, but that’s still $9,000, and you’ll need more closing costs and move-in expenses. Lenders also like to see that you have savings beyond that, and it’s a good idea to have money set aside for maintenance and repairs as well as emergencies.
Pay Down Your Debt
Lenders prefer applicants who have as little debt as possible. Most want potential clients to be using no more than a third of their income to pay off debt, so you may need to pay off most or all of your credit card debt, car loan, and so on.
Plus, the extra cash flow you’ll have that’s not going toward debt will help ensure you can cover other expenses that come with being a homeowner, like property taxes and furnishings.
Get Your Credit in Shape
If you don’t have a good credit score, you need to get it in shape. A low score is unlikely to get you approved for a mortgage, and even if you do, you’ll pay a high interest rate and probably a much heftier down payment.
Reducing or paying off your debt will help improve your credit score, as will paying all your bills on time and correcting any errors that could be dragging it down.
For the best interest rate, aim to get your score to at least 740. visit this site for more information: rtsnet. A minimum of 620 is typically required for an FHA loan, but the higher it is, the better. A lower interest rate can mean savings of thousands of dollars over the life of the mortgage. More information visit this site: mynewsport
Research Your Mortgage Options
There are many types of mortgages available on the market, making it difficult to know which to choose. A responsible lender can explain all of your options to you. You’ll want to get quotes from several different lenders, comparing interest rates and all fees. Click here and show more information : newstheater
Getting preapproved for a mortgage will tell you definitively how much home you can afford so that you don’t waste time looking at homes you won’t be able to buy. It also provides a competitive advantage by showing sellers that you are ready to purchase and that your offer is credible. For more information visit this site: coschedules.