Looking back to when I was house hunting for my first house, I remember the million questions I had, but I also remember the trustworthy people along the journey that helped me through this process.
Today, I will be giving you 3 tips you should highly consider prior to starting the home-buying process. Also, don’t forget to check out my Real Estate website.
- Check your Credit History and Credit Score: Scores run from 300 to 850 and of course the highest your score the better your mortgage rates may be. You are entitled to 1 report annually for free and you can get it here. Also, if you have a credit card, many offer credit scores for free as a cardholder benefit, if not look into sites like Credit Karma. Some of the things you can start to enhance your credit is pay down debt, credit card debt, pay off delinquent accounts and remove paid debts or errors that appear in your credit history report. This can take a while so it’s always a good idea to start now. Here is a free worksheet I use when I review my score and report annually.
- Get a mortgage Pre-Approval: Would you ever go to the grocery store with a list without knowing how much cash you have in your wallet or how much you have in your bank account? No, right? So this concept applies here as well. Doing this step is essential to know exactly how much mortgage and property taxes you can afford. Be mindful that mortgage lenders are different but some of the typical requirements for a pre-approval include tax returns, pay stubs and bank statements. You can shop around for a lender or you can also ask a trusted Real Estate Agent for a lender recommendation.
- Save your Pennies|Down Payment|Closing Costs & Other Expenses: The sooner you start saving the better you will be. Needing 20% as a down payment is a myth, nowadays you can buy a home with as little as 3% or 5% down depending on your mortgage lender. However, keep in mind that if you can’t put 20% down, you have to pay a monthly payment towards Private Mortgage Insurance (PMI), this is protection for the lenders. But don’t let this stop you either. Although I am not a mortgage lender and do not know the factors they use for their underwriting and to figure out this payment, I’ve seen some PMIs at around $30 monthly, which is still better than paying hundreds towards a rent and you see nothing in return at the end of the lease. Keep in mind you will also need funds towards closing costs which can be some thousands of dollars; make sure to ask your future lender all these questions.
As a homeowner having an emergency fund is necessary to prepare for unanticipated repairs, maintenance and or renovations. You will no longer have a landlord to run to when a problem arises but it’s a beautiful feeling knowing something is yours.
“DON’T WAIT TO BUY REAL ESTATE, BUY REAL ESTATE AND WAIT.”