Tired of Paying Rent? All You Need to Know to Get into a House
There’s nothing wrong with renting, but you may reach a point where you want to put that money towards a home of your own, instead. Considering how much money houses cost, buying one and qualifying for a mortgage can be a complex process.
Here’s what you need to know so that you can leave renting behind and become a homeowner.
You Should Save for a down Payment
Even though most people finance the majority of their home’s cost through a mortgage, you still need to have money saved for a down payment. The recommended amount is 20 percent of the home’s price, which means you’d be looking at $100,000 for a $500,000 house.
Now, there are plenty of mortgages you can get while putting less money down—in some cases under 5 percent. But 20 percent is the threshold where you can avoid paying extra for private mortgage insurance every month.
A Good Credit Score Is a Must
Any time you’re applying for a type of financing, whether it’s a loan or a line of credit, a good credit score helps. It’s far more important with a mortgage, though, because of how long you’ll have yours.
A difference of 1 percentage point in interest can mean quite a bit over a 30-year term. Get your credit score as high as possible before you apply for a mortgage.
Mortgage Loans Take Time
Applying for a mortgage isn’t a quick process. You need to bring in all kinds of documents for the lender to evaluate, and their decision can take a few weeks.
One smart move is to apply for a pre-approval with a mortgage lender like Home Mortgage of America or someone similar. This means the lender has agreed to loan you that amount, which can show sellers that you’ll be able to buy their home if you reach an agreement with them.
Know What You Want
There are tons of homes out there, and if you don’t figure out a rough idea of what you want, your search will never end.
Sit down and go over all the particulars for your future home before you start searching, including your budget, the number of bedrooms and bathrooms you need, your desired neighborhood and any amenities you want.
The home buying process certainly isn’t easy, especially when it’s your first time. Use the tips above and you’ll find the right home much faster.
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Category: Housing
