Buying a home can be a complicated process, especially if you know nothing about it. So before taking the plunge, make sure you are prepared. This means learning more about you options, requirements, and the things you need to boost your chances of scoring a home loan.
Mortgage lenders in Phoenix and other parts of the state share the things you should do before buying a house:
- Boost credit score. A high score (700 to 720) will help you get a good deal. Get your credit report and make sure that you are not being falsely penalized for corrected issues. Also, don’t apply for a new credit 12 months before trying to obtain a mortgage. Close your home first.
- Find out what you can afford. Ideally, your house expenses should not go beyond 28% of your monthly income. Before you proceed with the application, make sure that you have enough money to cover the new expenses. Choose a house that is financially comfortable.
- Build good savings. A healthy savings account will show that you have financial discipline. Lenders consider those with three to five months’ worth of loan payment ideal candidates. Set aside money every month to build healthy savings and have enough money to cover unexpected expenses related to owning a home.
- Pay significant down payment. You can now buy a home with as little as 3% down payment, but this means paying private mortgage insurance (PMI). This will significantly add to your monthly payment. To avoid this, aim for at least 20% of the house’s value.
- Get pre-approved. Before you shop for a home, get your finances in order. Find a reliable lender and get pre-approved. This will show that a lender is confident that you have the capability to pay down payment and cover the monthly home loan payments.
Don’t rush into buying a home. Make sure that you’re fully prepared in the process. It is also important to buy a property that will make you and your family for the next several years. A quick sale is not always your best bet, as you may end up regretting your decision.