Are you getting ready to purchase your first home? Do you know the necessary steps you should take to make this process as painless as possible? Even though this is one of the most exciting moments in your life, it can be equally stressful.
So, here are a couple of tips which can help you overcome this stressful situation.
Know how big of a house you can afford
One of the first steps should be evaluating the right moment. Generally speaking, owning a property pays off financially, especially if you intend to live in it for at least five years. Otherwise, renting is a perfectly nice way to get yourself roof over your head.
Run the numbers and determine whether you are financially capable of withstanding such a challenge. Even though many people consider property as an investment, it’s not always like that. You should buy a property because you want a home and not an investment.
Some people will stretch to buy a residence, thinking later they can flip it for a quick profit in a couple of years. However, only purchase a home you can afford. There is a rule which applies to a house payment, and it should never pass 30% of your gross monthly income.
Prepare for mortgage
Not many of us can pay upfront property and avoid mortgages. Average people have to rely on a mortgage if they want to own a property. Therefore, if you are purchasing a house with a spouse or a co-buyer, then a lender will check both credit scores.
Additionally, you will have to save money for a down payment if you want to decrease monthly installments. First of all, you have to make sure your credit score is in order and then start saving for a down payment. It should be between 3.5 and 20% of the purchase price.
Finally, if you are close to putting an offer, get your paperwork in order. You will need mortgage application, bank statement, W-2’s, and employment information.
Review mortgage types
Usually, potential homeowners leave mortgage shopping to the last minute and watch as their home goes away to another bidder who has paperwork in order. You should know that mortgage pre-approval is free of charge and shows that you are a serious buyer.
However, comparing mortgages can be a bit confusing. You can find adjustable rates, ARMs, or fixed-rates. The majority of buyers go for 30-year fixed rates, but in this case, you are paying a substantial interest as well.
Get are a real estate agent
With realtor’s help, this process becomes even more comfortable. Since he is a trained professional who knows the market, you will be able to find a house within your price range. Also, he can negotiate terms and conditions of purchase, bid instead of you, and help you with paperwork.
Of course, you can choose to proceed without a real estate agent, but you will be wasting a lot of time and money.