Cole Harris
Purchasing a home requires close attention to numerous financial details, all of which must be monitored far before, and throughout, the home-buying process. Your credit score, the value of your assets, debt, and current income all play pivotal roles in your eligibility for a home loan with a suitable interest rate. So, you’ll need to get these factors squared away even before you begin house-hunting. To make sure your home-buying process goes smoothly, here are four things you must do when buying a home as provided by the mortgage professionals at Rex Homes.
- Monitor Your Credit Report
A poor credit score will bar you from the opportunity of being awarded a desirable mortgage loan, thereby throwing a wrench in your plans for a new home. Checking your credit score at least one year in advance will give you ample time to amend any errors on your report and boost your score if needed.
To qualify for a traditional mortgage, the score you should be aiming for is around 650 or higher. If you are any lower than this, you can begin to improve your score by chipping away at any existing debt – especially revolving debt (i.e., credit cards).
- Set a Budget
This will require awareness of your own finances in addition to what lenders may be looking for. Of course, when setting your budget based on your perspective and financial circumstances, follow the 25% rule: This rule says that your mortgage should never exceed 25% of your gross monthly income – this includes payments to both the interest and principal balance of the loan, insurance, and taxes. (The Federal Housing Authority, or FHA, allows buyers to surpass this, spending up to 29% of their gross monthly income.)
- Get Pre-Approved
This is where you can solidify expectations for a budget based on your current finances and what lenders are willing to work with. Of course, getting pre-approved does not guarantee that you’ll be approved for a mortgage, but it helps to ensure your expectations are realistic.
Pre-approval is not something you should do until you’re ready to narrow down your decisions for houses. This is because it is a conditional commitment from a lender to offer the specified loan amount based on the information you provided. This commitment is only valid for up to 90 days, so don’t let it go to waste.
- Research the Market in Potential Neighborhoods
Once you have all this in line, you’re ready to begin house-hunting. Research the market in the area you plan to live in. Get a good idea of the choices available to you, and what you should be expecting in terms of pricing. In addition to the financial aspects of the area, take a look at potential neighborhoods and the surrounding areas at various points in the day to get a better idea of the safety in the area.
When you’re ready to settle down, get in touch with a qualified mortgage professional. They’ll help you to close on the home of your dreams, and ensure that you don’t exceed your budget and aren’t surprised by hidden fees. Keep your home-buying process on track by contacting a mortgage professional today.
