You want to buy but you just don't know where to start or how. Getting your finances together, looking at homes then pulling the trigger all seems like huge steps, and they are! But you can make it easier and more affordable with these 10 simple steps.
1. Fix Your Credit Score
Start here before you ever apply for a home loan. Check the history for 12 months to fix any errors and correct any issues before applying. Depending on what you are going to be applying for, VA approved lenders require a credit score of 620 and FHA's 3.5% down payment program requires a credit score of at least 580. Anything over 700 can usually qualify for a conventional loan.
2. Close toward the end of the month.
All prepaid expenses such as mortgage interest, homeowners dues, mortgage insurance, home insurance, and taxes accrue from the date of closing through to the end of the month.
3. Look for low down payment options.
There are several low down payment programs, such as the FHA or other USDA and national and local programs that can offer down payment assistance, grants and credits toward your down payment or the purchase price of your home.
4. Practice paying your mortgage payment.
If you've already started saving for a down payment and you're making monthly rental payments, consider increasing the rental payment to what a mortgage payment would be and put the extra away. This will get you in the habit of making that mortgage payment each month and find out if your finances can handle it.
5. Downsize other major plans.
If you're considering a wedding, vacation or other major financial expenses consider downsizing them in order to save money for a down payment. Cut costs, go on vacation in offseasons or simply find a better deal on things so that you can save money elsewhere.
6. Research the housing market.
Understanding the housing market is a key component to getting the best deal and understanding the market. You certainly don't want to overpay so talking to your real estate agent and finding out about the best deals in the best neighborhoods is a great way to set yourself up for financial success.
7. Adjust expenses.
Do you really need a dream home right off the bat? You may want your dream home to start but actually, starting off with a smaller home, gaining equity and then rolling that into a larger home is really a better way to do things. Your finances are not strained and you can practice the art of homeownership first.
8. Consider a fixer-upper.
You can get a great deal by purchasing a fixer-upper, especially if you are handy with construction. You can do a lot of the work yourself or spend some time and do things gradually, increasing the value and selling it for high equity later on.
9. Get a good real estate agent.
Once you've worked on your finances you want to hire a real estate agent to be your buyers representative. This agent will know the market, help you find the right home and facilitate the transaction. Going with the listing agent on the property means that your needs, budget, and negotiation strategies are not the highest priority. Have your own agent when looking for homes. Need an experienced agent? Start here...
10. Relax and have fun.
Buying a home should be fun but also planning, getting experience and education will make the entire process much less stressful. Contact us today to get started or for answers to any of your home buying questions, we're here every day of the week. [Article derived from GoBankingrates.com]