Buying a house is an overwhelming experience. If you do not know what you are doing, you will be left with buyer’s remorse at the end of the transaction. With this, it is important that you do it right – even if it is your first time. You have to get more info because buying a house is the most important decision you will ever make.
You should consider some tips to help you navigate through the process and ultimately save money. The tips will also help you avoid common mistakes. Here’s the list of tips worth remembering:
Explore your down payment and mortgage options
It is common in the US to put 20% conventional down payment. However, many lenders allow lesser down payment, especially for first-time buyers. It is important that you know your options to make an informed decision. Options include the following:
FHA (Federal Housing Administration) loans: the FHA loan is designed for low to moderate income Americans. The down payment is as low as 3.5%. However, not all can qualify. Aside from low down payment, the FHA loan also makes it possible to own a house even for a credit score of 580.
• Veterans Affairs loans: this type of loan is created to help to return service members buy homes without needing down payment or even excellent credit.
Keep in mind that the amount you put down will affect your interest rate and mortgage payment. If you want the smallest mortgage payment, opt for a 30-year fixed mortgage but if you can afford larger monthly payments, you can get a lower interest rate for 15 to 20-year fixed loan.
Check your credit and stop any unnecessary spending
If you consider conventional mortgage loan, your credit will be the key factor whether you get approved or not. Your credit score will also help determine your interest rate and the loan terms. With this, it is important that you check your credit before you start the process. To keep your credit score strong, avoid opening new credit accounts until your home loan closes.
Compare the mortgage rates
Many homebuyers commit the mistake of getting a quote from only one lender. This is not wise. You should have at least three choices to compare the mortgage rates. Your goal here is to find the possible rate that you are comfortable with. While you are it, get a pre-approval letter so it can give you an estimate of how much a lender may be willing to lend you based on your debts and income.
Choose the right type of house and neighborhood
When looking for the right type of house and neighborhood, you need research. Check its accessibility and safety. You should also take a look at the map and determine if there are nearest hospitals, pharmacy, grocery store and other amenities that you are using. Finally, drive through the neighborhood on various days so you will have an idea of how it is.
Stick to your budget
It always a good idea to look at properties that cost less than the amount that you were approved. Shopping with a firm budget can help when it comes to making an offer.