Buying Your First Home: A Plan Of Attack For Potential Home Buyers

Are you thinking of buying your first home? It definitely is a very exciting thing to do, but there is just so much to think about. We have put together a list of thoughts you will want to consider before taking your first step. Read on for some great home-buying tips that will help you plan your process.

A. If you're not necessarily planning on staying in the same place for at least a couple of years, then this probably isn't a good time for you to buy a house. The transaction costs involved with the transfer of property aren't cheap, so the a shorter period you have your house, the more you risk losing money if you decide to sell. This could occur even during an appreciating market, and is all the more true in a regressing market.

B. Before starting looking for homes, absolutely get pre-approved for a loan! This tends to keep you from looking at residences that you can't afford, and will put you in a situation so that you can take action as soon as you locate a home that is best for you. Do not confuse pre-approval with pre-qualification, which is mainly based on a less-thorough review of your finances. A home-loan specialist pre-approves you based on your actual earnings, debt and credit rating.

C. Have a look at your credit history at least three months (preferably six) before you are all set to home shop. Your lender will pull your credit report as part of the pre-approval procedure mentioned above, and often can work with you to suggest courses of action that will help you repair any problems that you discover. This is another reason to complete your first pre-approval months prior to being ready to move.

D. Look for houses that you can truly afford. Right after your lender pre-approves you, she or he will tell you the absolute maximum price for which you can obtain a mortgage. But that's not always the most valuable piece of information. A superb loan officer will always ask you how much you are comfortable paying on a monthly basis, then work that into the equation. It really doesn't make any difference if your mortgage lender can pre-approve you to spend $600,000 if the most that you are comfortable having to pay every month is equal to the payment on a $300,000 residence. And, certainly, you're going to need to pay that amount ever month.

E. The old popular 20% down payment is not specifically the norm nowadays. While it is true that the more cash you put down on a house the less you will pay each month, there are many different loan programs on the market today which call for a smaller amount down, like FHA loans, which simply need 3.5%. Your lender can tell you all about the several programs and help you determine which one is best for you.

F. When picking a home loan, you'll be able to usually determine if you would like to pay discount points in return for a lower interest rate. This can be known as “buying down the rate.” If you are planning to remain in the home for an extended time (regularly no less than 3-5 years), it usually is best to pay the points. The discounted monthly interest could save you money during the lifetime of the loan.

Read up on Downtown San Diego real estate and Hillcrest real estate.

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