Wondering if you’re ready to buy a home? Here are 6 factors to consider when you’re first getting started.
1. What’s Your Credit?
Seriously, what’s your credit? Most people have no idea! Unless you’re going to pay all cash for your new home, you need to get a credit report and make sure that everything is in order. If it isn’t, you need to fix any problems you encounter before you can even think about qualifying for a loan.
2. Can You Really Afford It?
The general rule for home purchases is that you should aim for something that is about 2 or 3 times your annual salary. If you want something a little more accurate, try the mortgage calculator on our website. Just scroll over the “Buying” tab and select Mortgage Calculator!
3. Buy Only If You Can Stay Still
When buying a new home, you really need to make sure that you can commit to remaining there for some time – we recommend 3-5 years. If you end up selling sooner than this, even if the market is strong, you may still end up losing money when you add up all of the transaction costs associated with the purchase and sale.
4. You Don’t Need a 20% Down Payment
Although it’s hard to get a loan if you haven’t saved much money, there are both public and pri- vate lenders who, given the right credit and qualifications, may offer low interest mortgages that require less than 20%, although if you don’t have 20% saved, are you really ready? You need to ask yourself that question.
5. Location, Location, Location
You don’t like to swim and you don’t have any kids; does that mean you shouldn’t buy a beautiful beachfront home in a great school district if you can find a great deal on it? These may not be required criteria when you’re looking to buy, but when the time come to sell, it can make a differ- ence! Above all, if you want to ensure good resale value, make sure that the home you want to buy is in a good school district and is not located on a main road or intersection (or other noisy area). Good luck selling a home that has a major highway running behind it!
6. Before House Hunting, Get Pre-Approved!
Getting pre-approved will save you the grief of looking at houses you can’t afford and will put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history. In today’s hot real estate market, many sellers will not even consider an offer that is not accompanied by a pre-approval letter.
Learn More: Home Buying 101
Are you a first-time home buyer? This quick video provides an overview of what to expect.