NEWARK – Buying a home for the first time can be a rewarding experience.
A home is an investment and a place where you and your family can call yourself. There are many steps involved in buying a home. Before falling in love with a property or contacting a real estate agent, it is important to make sure that your finances are in good shape. In order for your home purchase to go smoothly, you should know where you are financially. To help you assess your financial eligibility to buy a home, consider the following:
Check your credit score. An important first step is to check your creditworthiness. Your score will help you determine the funding options that are available to you, and your score will affect your mortgage terms. Lenders check credit scores to determine if a borrower has on-time payments to estimate the likelihood of the mortgage repayment. The higher your credit rating, the more financing options and lower interest rates are available to you.
Set a realistic budget. How much home can I afford is one of the first questions first-time buyers ask themselves. Experts say your total monthly home expenses shouldn’t exceed a third of your gross monthly income. When preparing a budget, be sure to include your estimated housing costs and down payment. Your estimated housing costs should include not only your mortgage payment, but other factors such as your estimated annual property taxes, home insurance, and loan terms (how long you plan to repay your mortgage).
Look around for a mortgage rate. To get the best financing offer for your new home, you should start looking for a home loan. Comparing costs can save you a significant amount of money in the long run. If you need help, a mortgage lender can guide you through the various loan options available. There are different types of mortgages including FHA, conventional, adjustable and fixed rate. You need to learn more about each mortgage to find out which option is best for you.
Know your deposit options. The long-standing myth of the first time home buyer is that you need a 20 percent down payment to buy a home. Various loan programs and options are available to help buyers advance home purchases with a lower down payment. The decision on how much to bet is a personal choice based on your financial situation.
Get pre-qualified or pre-approved for a mortgage. While the terms seem interchangeable, they do vary when it comes to buying a home. Once you’ve pre-qualified to own a home, your financial profile, including a credit check, will tell you how much money you can borrow. Pre-qualifying will teach you more about your financial readiness and an introduction to the mortgage options that are available to you. To get pre-approved a mortgage, give a lender more details about your financial situation and a credit check. After the lender verifies your details, you will receive a letter stating the amount and type of mortgage that are available to you. In a competitive real estate market, a pre-approval letter shows sellers and real estate agents that you are a serious buyer ready to make an offer on a home.
For more information about buying a home in Licking County, contact Buckeye Valley BIA at (740) 345-2898.