There are countless advantages to purchasing a new home. You are able to build equity, enjoy pride of ownership, and truly make a home your own. If you are planning to buy property in the near future, preparing now can help you save time and money. Being prepared may also give you an advantage over other buyers. Here are a few tips to consider prior to your home search.
Know your bottom line before you start looking at homes. I’m sure you’ve heard this before, but think about more than just knowing what price you are willing to pay. Consider the distance you’re willing to commute to work, the number of bedrooms and bathrooms you require and what you need in terms of local amenities. If you have children, you’ll likely want to consider schools and parks in the area. By determining your bottom line before you begin the search for a home you can avoid making snap decisions based on emotional responses to attractive home features.
Credit Check. Life happens, bad credit happens. But who wants to discover that they have a bad credit rating after finding the home of their dreams? Before meeting a lender, you can obtain a copy of your report which will give you an opportunity to take care of any unsettled debts. You can obtain a copy of your credit report from TransUnion or Equifax.
Avoid major purchases prior to buying a home. Lenders tend to be uneasy when they see potential homeowners stretch their disposable income into buying a car or boat for example. Such purchases can make it difficult to obtain a mortgage or may lower the amount you can be approved for.
Anticipate higher interest rates. Recalculate the above maximum monthly mortgage payment based on higher interest rates. Ask yourself if you can afford to pay a higher monthly payment without sacrificing other commitments.
Determine your cash flow at the time of purchase. There are various fees involved with a real estate transaction which are outlined here. Moving from a rental suite, you should be prepared for expenses that may have been previously included with your rent such as heat, water, electricity or cable.
Your paperwork should be in order. Lenders will often need to see bank statements, pay stubs, and tax documents for the past two years.
Get pre-qualified for a loan. Once you have a calculated budget you can live with, approach a lender to find out if you can get pre-qualified for a mortgage and how much you can spend on a home.
Buying a home is not only a lifestyle change, but it’s also an important investment. To make the most of your investment, plan ahead to find the right home and the best rates.