Buying a house is the most significant financial commitment you will be making in your life. As it involves a lot of money, learning how to buy a house is not an option but a necessity. However, the good news is that there are many easy ways to follow guidelines that can help you purchase your dream home. Listed below are a few of them:
Saving for a down payment: Buying a home will take time unless you have some money saved for the down payment. You can’t buy a house the minute you see your dream home, it starts much before that. The lender will be willing to provide a loan only if you show that you have enough money saved. Starting early and saving often is the key. A minimum of six to eleven percent of the house value is needed as a down payment, though saving for about 20% is ideal.
Find out your credit score: Your credit score tells about your financial health and whether you will be eligible for home loans and a better mortgage rate. A higher credit score means you get a lower rate of interest as the loan is considered low-risk by the lender. To maintain a good credit score, ensure you pay your bills on time and avoid taking loans on credit cards.
Calculate the mortgage you can afford: Calculate your monthly expenses and find out how much you can afford to pay as a mortgage every month. It will be a maximum of 30% of your income.
Learn about mortgage options and rates: There are many options with varying rate of interest, learn which one suits you the best.
Hire a mortgage broker: Look for a mortgage broker who can get quotations at competitive rates. Hiring one will also reduce the burden of shopping around for the right product among the many available in the market. They also help you to secure loans faster.
Get a pre-approved loan: A pre-approved loan will help you know in what price range you can afford to buy a home as it indicates the loan amount that you can get at a specific interest rate. It is a commitment from the lender and is a boon for a serious buyer. You will have to provide all the personal financial details for this to be approved.
Hire a real estate agent: A good real estate agent helps you find the home that you need and in the locality that you desire. Moreover, they are better at negotiating and help you buy a home at a better price. It also helps save time as you don’t have to spend time looking at homes that do not fit your requirement.
Shop for your home: Once you are ready with the down payment cash, pre-approved loan, it is time to shop for your new home that is shown either by your real-estate agent or through various online and offline resources. Once you like a home, ensure that you visit it many times and make an offer only when you are extremely sure of your decision. After this, get the home inspected and apply for formal home loan approval.
In the end you are the right person to judge what is right and best for you, so sit back, think and take the right decision!