Purchasing a new home is a huge financial responsibility. Here is a list of 4 steps you can follow to smoothen the purchase process and get you closer to your home buying dreams. For more information on these steps from the mortgage experts at Rex Homes, you can visit their blog here: https://blog.rexhomes.com/success-when-buying/
- Check your credit score
First and foremost, always check your credit report before you start planning to buy a house. It is recommended to work on your credit score at least one year before buying a home. This will give you enough time to improve your score or correct any issues or errors. Almost all mortgage lenders require that you have a credit score of 650 or higher. A credit score of 740 or higher, along with solid financials can help you qualify for a low-interest mortgage rate.
- Determine what you can afford
Your debt-to-income ratio plays a vital role in determining the mortgage that your bank or a lender will approve. Financial experts suggest that the total of your monthly house payment that includes principal, insurance, taxes, and interests should be less than 28% of your gross income. Lenders and banks also evaluate if you have any other debts like school loans, car loans, or credit card payments when reviewing your mortgage application. To be able to secure a favorable mortgage interest rate, it is recommended to keep this amount below 36% of your monthly income.
- Get pre-approved for a mortgage
An excellent way to convince the seller that you are genuinely interested in buying the property is by getting a mortgage pre-approval and keeping your financials organized. Such pre-approval is a conditional commitment offered by banks or lenders that the buyer is eligible to receive a specific amount based on the information provided. Remember that pre-approval is just a conditional offer and does not guarantee a mortgage.
- Scan all potential neighborhoods
It is essential to remain aware of the neighborhood where you are planning to buy a house. Find out if there are any other houses available on the market, their prices, etc. Scout the area where you plan to buy a home by visiting it both during the day and night. Besides, check the surrounding recreational areas, shops, schools, test your work commute, and talk to the current residents in the locality if possible. Although it may seem like a daunting task to scan all the potential neighborhoods, it can be beneficial when you are making a purchase decision.
Hiring a Mortgage Professional
Understandably, purchasing a new house is not as simple as buying a TV set from the mall. When you plan to buy a home, it is recommended to seek help from a seasoned mortgage professional who can give you valuable advice on the steps that need to be followed for a smooth purchase process.
Besides, an experienced mortgage professional can evaluate your finances and help you find the best mortgage deals within your budget. A mortgage expert will also offer valuable guidance and insights that can help you improve your credit score and get you closer to the home of your dreams.