August 21, 2015
Preparing to Buy a Home: What Do You Need to Know?
Whether you are thinking of buying for the first time, or currently own and are hoping to make a move, it's important to have your figurative house in order and understand your options before you buy.
Know Where You Stand
Experts advise understanding your full financial landscape before you look to buy a home.
Your credit history should be in the best shape possible (Establishing or Improving Credit), as your credit score will influence the rate for any loan you apply for, including a mortgage. Start by getting a copy of your credit report a few months before you begin house hunting, and ensure all the history being tracked for you is accurate. If you find any errors on your report, work with the reporting credit agency (Experian, Equifax, and TransUnion are the big three) to correct the mistake.
If you already own a home, it's a good idea to have your property evaluated to understand its true value prior to putting it on the market. Online resources like Zillow or Trulia can help, your local bank is more likely to paint a clearer picture, as they have access to more in-depth tools to perform a home valuation.
By understanding your position in advance, you'll be better equipped to make a decision on a home purchase when the time comes.
Be Realistic About What You Can Afford
It's easy for your eyes to get bigger than your wallet when you're looking at real estate, and to want a perfect, move-in-ready home. Typically, it's a good rule of thumb to spend about two-and-one-half times your annual salary on a home purchase. Consult with an expert for a free financial evaluation at Financial Evaluation or use one of the calculators available online at Beneficial Calculators, to get a realistic view of how your income, debts, and expenses affect your home purchasing power.
Get Pre-Approved in Advance
Obtaining pre-approval, which is based on your income, debt and credit history, ultimately saves time and helps you house hunt in your true price range. When you're ready to make an offer, it also puts you in a better position to do so.
Understand Your Options – Or What You've Already Got
New rules are making the purchase process easier on prospective homebuyers. For instance, FHA (Federal Housing Administration) rates are at historic lows (Loan Information), and the program has recently been streamlined to make it easier to apply. This can be a great option for a new homebuyer, or for a current FHA borrower to refinance their existing FHA loan at a lower rate. Not sure if you qualify for a refi or a first time purchase? Contact an expert, like a Beneficial lender, to help you understand your options.
*All loan products subject to credit approval.
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