Searching for a home is exciting, and it can be very tempting to hire a real estate agent and immediately begin shopping. The problem with this is twofold: you may not fully understand your price range, and you won’t be able to make a qualified offer when you do find the perfect home. Getting pre-approved for a mortgage before you shop will allow you to refine your price range, and enable you to quickly make a strong offer on the home you desire.
Your credit score and debt-to-income ratio are two of the most significant metrics that lenders use when approving you for a mortgage. You can find your credit score on sites such as freecreditreport.com and creditkarma.com, and you can calculate your debt-to-income ratio by dividing your recurring monthly debt by your monthly gross income.
Monthly mortgage payments are often significantly lower than renting costs, but they’re not the only cost of owning a home. Property taxes, homeowner’s association fees, and home maintenance costs can add significantly to your monthly expenses. Make sure to incorporate these into your budget.
The lender and mortgage you select can help save you thousands of dollars over the course of your mortgage loan. Before choosing a lender, search for their current interest rates online and compare those with other lenders. After you’ve narrowed your choices to a few lenders, determine which lender will give you the best advice when choosing your mortgage product.
Certain mortgage products may be great for one borrower but not for another. For example, ARM loans are great for borrowers who will be moving or refinancing soon, whereas fixed rate mortgages are great for borrowers who are settling down.
Closing costs add up quickly. Taxes, origination fees, the down payment, attorney fees, title insurance, and all other closing costs place a large initial hurdle to buying a home. Make sure to thoroughly inspect your HUD-1 Settlement Statement before you close to budget and understand your closing costs.
Home inspections are often considered to be an annoying expense, but the value of a home inspection can be massive. To an untrained eye, the home you’re looking at may seem perfect, but an inspector will help point out any potential flaws in the home. These will give you a better understanding of the home you’re buying, and will allow you to negotiate with the seller for repairs or credits.
The closing costs for buying a home are not the only expense you’ll have when transferring ownership. Selling costs can also be extremely pricy – especially when you seek the assistance of a real estate agent. If you think you may move in the next year or two, it is probably smarter to rent instead of buy.
Don’t trust any commitment unless you have it in writing. Having a commitment in writing will give you legal leverage if the other party attempts to back out of their commitment.
Susan is committed to making each transaction work seamlessly, guiding and educating her clients along the way.Contact Us