Katie McBride's Blog
Buying a home is one of the biggest purchases that you’ll ever make in your lifetime. You’ll spend decades of your life making mortgage payments to pay off your home loan. Buying a home is more than just simply finding a place to live. It’s also a financial decision. Your home helps you to build equity, gives you tax deductions, and helps you to have some security in your financial future.
One of the biggest questions that you’ll have when you buy a home is “How much can I spend?” To answer this question, you’ll need to dig a little deeper.
Do You Have Money For A Down Payment?
The standard amount of money that you’ll need for a down payment is 20 percent of the purchase price of a home. If you don’t have the money for a full down payment, you’ll need to pay for private mortgage insurance (PMI). This could add up to be an extra cost of hundreds of dollars per month in additional insurance payments on top of your mortgage and every other kind of expense that goes along with buying a home. You’ll need to take the time to save up for a down payment if you’re a first time homebuyer. If you already own a home, the equity that you have in that home can help you with the down payment.
What Are Your Other Financial Responsibilities?
There’s more to buying a home than just the monthly mortgage payment. You’ll need to get insurance, pay taxes, and have some money set aside for repair and decorating costs. You’ll need to look at your monthly income to find out just how much you can afford on a home. You should take an honest look at your lifestyle and existing expenses in order to determine a comfortable monthly mortgage payment for you.
Know Your Credit Score
Your credit score will be a major factor in how much house you’ll be able to afford. Your lender will use your credit score and credit history to help determine what type of interest rate you’ll get and how much they’re willing to lend you in order to buy a home.
Understanding what you can afford for a home purchase is crucial before you even start shopping. It’s a good idea to meet with a lender to get pre-qualified. This is different than getting pre-approved. Your lender will give you a general idea of how much you can spend on a home without digging too deep into your finances. Getting pre-qualified is a great place to start when you’re looking at the numbers of being a homeowner.
Generally, the length of the homebuying journey depends on the individual. In some instances, a buyer will purchase the first house that he or she views in-person. Or, in other cases, it may take a buyer several weeks or months to find a house that matches his or her expectations.
There is no need to rush the homebuying journey. But if you know what to expect when you pursue your dream house, you may be able to seamlessly navigate the property buying cycle.
Now, let's take a look at three tips to help you streamline the homebuying journey.
1. Establish Homebuying Criteria
If you know where you want to live and what you want to find in your ideal residence, you can tailor your house search accordingly. And as a result, you may be better equipped than other property buyers to discover a great house at an affordable price.
As you put together homebuying criteria, it is important to consider your long-term plans as well. For instance, if you enjoy city life and want to spend as much time as possible in the city, a house in the city may be the right choice for you. On the other hand, if you want to raise your family in a small town, you may want to hone your search to houses in small towns.
2. Get Pre-Approved for a Mortgage
A home purchase likely will require you to obtain a mortgage. Fortunately, banks and credit unions are available nationwide, and these financial institutions can help you get pre-approved for a mortgage.
Meet with several banks and credit unions so you can learn about all of the mortgage options at your disposal. Then, you can select a mortgage and enter the real estate market with a budget in hand.
3. Hire a Real Estate Agent
If you're on the lookout for your dream home, you may want to hire a real estate agent. This housing market professional can keep you up to date about new residences that become available in your preferred cities and towns – and much more.
Typically, a real estate agent will do whatever it takes to help you find and buy your dream home. He or she initially will learn about your homebuying goals and develop a custom homebuying strategy for you. Next, a real estate agent will set up home showings and keep you informed about open house events. And if you discover your ideal residence, a real estate agent will help you craft an aggressive offer to purchase this house.
Let's not forget about a real estate agent's homebuying expertise, either. If you ever have concerns or questions during the homebuying journey, a real estate agent can respond to them. That way, you can gain the insights you need to make an informed home purchase.
Simplify the homebuying journey – use the aforementioned tips, and you should have no trouble finding and acquiring your dream house.
There’s a lot of things to think about before buying a home--some financial, others personal. Most people tend to focus on one or the other. However, both are instrumental in choosing the right house and buying at the right time.
In this article, we’re going to talk about some of the ways you can determine if you’re ready for homeownership. We’ll discuss things like credit scores and down payments, but also important life factors like your career and future plans.
Getting your finances in order
There are a few simple things you can do right now that will help you understand if you’re financially secure enough to start looking at houses. First, you’ll want to look up your credit score.
Lenders strongly consider your credit when determining how much risk is involved in lending to you. A higher credit score can not only get you approved for a mortgage, it can lower your interest rate and make you eligible to borrow without having to pay private mortgage insurance.
The amount of money this saves seems trivial in the short term, but over the lifespan of your loan it can save you tens of thousands of dollars. So, read a free credit report and if your credit is lower than 700 start finding ways to improve your credit.
In the meantime, you’ll want to save for a down payment. While it’s possible to buy a home with a small or no down payment, it can come back to haunt you in the form of interest as you pay off your loan. Furthermore, many lenders won’t pre-approve you unless you make a down payment of a minimum amount (often 20% of the loan).
If you have a high credit score and you’ve saved for a down payment, another thing to check off your list would be proving your stable income. This can be difficult for the self-employed, contract workers, or people who have recently changed jobs.
Lenders want to see that you have a stable income history to ensure that you’ll be able to pay your mortgage each month. If you recently changed jobs or are in between jobs, it could be to your benefit to wait 3-6 months before getting pre-approved. In that time, you can continue to raise your credit and save for a down payment, further increasing your chances of getting a low-interest loan.
Preparing for homeownership
While the financial aspects of homeownership are important, so are the personal aspects. You’ll want to consider several life factors before buying a home.
First, think about your longterm goals. Do you want to live in the same area for the next 10 to 30 years? Will your career bring you to different regions or will you attend school somewhere else? These questions will help you decide if it’s a good time to buy or a better investment to save money while renting.
If you have a family (or plan on having one soon), you’ll also have to find a way to balance all of your living needs.
Finally, ask yourself if you have time for homeownership. Many people who are used to renting aren’t aware of the amount of time and money it takes to maintain a home. You’ll have more bills, you’ll have to mow your own lawn, and you’ll be responsible for maintenance of your home.
After you submit an offer on a home and complete a property inspection, there may be only a short amount of time until you close.
Ultimately, it pays to prepare for closing day. If you start planning for your home closing today, you can identify and address any potential problems.
To better understand how to get ready for a home closing, let's take a look at three questions to consider before your closing.
1. What needs to get done before my closing date?
Your closing date may be a few weeks away, but time moves quickly, particularly for a homebuyer who wants to get into a new residence as quickly as possible. Fortunately, homebuyers who understand what needs to get done prior to a closing can plan accordingly.
Typically, a homebuyer will need to secure homeowners insurance and title insurance before closing on a house. Insurance companies are available to provide information about both types of insurance. If you reach out to these companies immediately, you can guarantee that your home and personal belongings will be covered against loss or damage.
You'll need to contact utilities providers as well. That way, you can ensure that your gas, electric and other utilities are good to go as soon as you close on your home.
2. How much are my monthly mortgage payments?
You know that you've been pre-approved for a mortgage. However, if you don't know how much that you'll be paying for your home each month, you'll certainly want to find out sooner rather than later.
Monthly mortgage payments can add up quickly, particularly for homebuyers who fail to budget properly. If you know exactly how much that you'll be paying each month for your home, you can effectively map out a budget.
3. What do I need to bring to my closing?
Homebuyers are required to bring a government-issued ID to a closing. In some instances, you may need to provide a certified or cashier's check to cover assorted closing costs as well.
If you are unsure about what to bring to a home closing, it often helps to consult with a real estate agent. In fact, this housing market professional can help you seamlessly navigate all stages of the homebuying cycle.
Prior to a home closing, a real estate agent is happy to respond to any concerns or questions that you may have. This housing market professional will explain how the home closing process works, how long the process generally takes to complete and, perhaps most important, when you'll receive the keys to your house.
A real estate agent also goes above and beyond the call of duty to provide assistance throughout the homebuying journey. He or she can help you compare and contrast a broad range of houses, submit a competitive offer on a home and ensure that you can discover your dream residence in no time at all.
Get ready for a home closing – consider the aforementioned questions, and you can prep for your closing date.
If your initial offer to purchase a home is countered, there is no need to stress. In fact, there are lots of reasons why you should negotiate with a house seller, and these include:
1. You can speed up the homebuying journey.
The homebuying journey may prove to be long and complicated. If you find a house you want to buy, however, there is no need to wait to submit an offer to purchase this home. And if a seller wants to negotiate with you, it may be worthwhile to work with this individual so you can acquire your ideal house.
A homebuying negotiation enables you to try to reach a house purchase agreement with a seller. Plus, if you and a seller cannot come to terms, you can always reenter the housing market and continue to search for another home that matches your expectations.
2. You can find common ground with a home seller.
When it comes to buying a home, it is important to avoid submitting a "lowball" offer to purchase. If a buyer submits a lowball property buying proposal, he or she risks alienating a seller. Worst of all, a seller may be more likely than ever before to reject the buyer's proposal and move forward with other offers to purchase.
Thanks to a homebuying negotiation, you can come to terms on a home purchase agreement that works well for both you and a seller. As a result, both you and a seller will be satisfied with the final terms of a home purchase agreement.
3. You can pay the lowest price for your dream home.
If you feel a seller's initial asking price is too high, negotiating with this individual offers an excellent opportunity to get the best price for your ideal house. And if you open up negotiations with a seller, you could acquire a terrific house at a budget-friendly price.
Of course, it is crucial to consider the seller's perspective during a homebuying negotiation. If you maintain constant communication with a seller, both you and this individual can work together to finalize a home purchase contract.
Negotiating with a home seller may be stressful, regardless of whether you are buying a house for the first time or have purchased residences in the past. Fortunately, if you hire a real estate agent, you can receive expert support as you negotiate a home purchase.
A real estate agent is happy to negotiate with a house seller on your behalf. He or she will keep you up to date throughout a home purchase negotiation. Best of all, a real estate agent will do everything possible to help you purchase your dream house at the lowest price.
For those who want to achieve the optimal results during the homebuying journey, it generally is a good idea to negotiate with a seller. If you are willing to negotiate with a seller, you could acquire your dream home faster than ever before.