5 Things You Need to Buy a Home

If you are in the market for a new home, you need to have some idea of the prep work that is involved. To that end, let’s take a look at what you need to do to ready yourself to buy a home.

Credit

Before you should even consider getting a home mortgage, you need to check your credit score. This is the numerical representation of your actual credit history. Almost everyone uses FICO scores, which range from 300 all the way up to 850. The higher the score is, the better your credit. Credit scores of 740 and above tend to get the best interest rates available. If your credit score is even a point or two lower, you will end up paying thousands more each year. If your score isn’t at that 740 mark, you need to concentrate on repairing it before you do anything else. Make sure that you are paying your bills on time each month and try to get your credit limits raised. Try to keep your balances lower than 30% of your credit limits.

Cash

Aside from the mortgage loan itself, you might need a good sized amount of cash if you want to buy a house. Things you will need to cover include the down payment, closing costs, and the cost of moving and having all of the utilities turned on. You also need to have money set aside for unexpected things like repairs. This is one of the best tips for first time home buyers. Without doing this, you could easily end up with an extra $5,000 in debt just during the process of buying it.

One solution to this is to get your emergency fund bulked up. Instead of family and friends giving you material gifts on gift-giving occasions, ask for cash gifts instead. Put that extra money right into that emergency fund. Add your tax returns to it too.

Real Estate Agents

If you have a friend, relative, or neighbor who knows a real estate agent, that is great! Their agent might be just the one you need. However, you also owe it to yourself to look around for more than one. You need to find one who is integral, good, knowledgeable, and who is willing to help you reach your goal of owning a home without being too pushy. It is best to find one who is not aware of how to conduct different transactions, one who is new, or a novice. This is essential if you want to buy a home that is perfect for you.

Watch Those Interest Rates

If you are paying attention, you might take notice when you hear that interest rates are lower than they have been in a while or even that they are slowly on the rise. Even then, don’t assume that you won’t be able to get a good, low rate. Interest rates are not the same across the board for everyone. The rate you can get will be determined by your lender and your financial image. For this reason, it is always a good idea to do your homework when it comes to interest rates. One thing to note is that closing costs can also vary, so ask your real estate agent for tips to keep those costs to a minimum.

Find a Lender

Before you begin the search for a home, you should find a mortgage lender so that you can determine if you can even afford to buy a house. If you can’t right at this moment, there isn’t any need to torture yourself by going out and finding the “perfect house” without knowing if you will be able to afford it. Things to look for when finding a lender include:

• What they offer
• Points
• Costs
• How long it takes to close

When you have a better idea – from the lender – of what you can afford, then you can start looking for a house. What you can afford will be determined by the amount that you can get pre-approved for.

If you prepare yourself to buy a house before you do all of these things, you will make the process incredibly easier to get through.