What to do before you buy a house.
Are you thinking about buying a house? Consider these tips for getting ready to buy:
Save for a down payment. The minimum down payment for an FHA loan is 3.5% of the property’s purchase price. This might be a pretty good chunk of money for many homebuyers, but don’t worry! If you’re not quite there, you can work on the rest of these steps while you save.
Review your credit history. Is it good? The better the credit history (and the bigger your down payment) the more desirable your loan terms and interest rate will be.
Improve your credit. It’s simple: pay your bills and pay them on time! If you tend to be forgetful when the first of the month rolls around, consider setting up automatic monthly payments for some accounts.
Do not purchase any big-ticket items on credit. This includes vehicles, furniture or even a vacation. Doing so negatively affects the amount you can borrow. These personal loans increase your debt-to-income ratio which in turn will decrease your borrowing power and your purchasing power.
Shop around for a mortgage now, before you shop for a home. Many homebuyers neglect this primary step toward purchasing a home. Comparing lender commitments will expose big differences in loan terms and costs. Don’t quit shopping until you’ve spoken with at least three lenders.
Get a written preapproval for the maximum 30-year fixed-rate mortgage you qualify to receive. A preapproval letter is a must nowadays. It tells sellers you mean business, and you have the money to back up your offer.
Find a real estate agent you are comfortable with. Buying a home is a huge deal. Selection is about when, where and what price, and includes a big financial commitment. You need an expert at your side to guide you through the process and help you make the right decisions.