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When it comes to buying a house, you'll need to rearrange your priorities to achieve this goal. This means you'll need to say no to frivolous purchases and dedicate yourself to delayed gratification and self-discipline during the process. Here is a list of 7 things you must prioritize when buying a house..
1. How Much Can You Afford?
You want to prioritize affordability when buying a house. Think about your current income along with any current debts you have. Many lenders want you to have a good debt-income ratio, and if your debt exceeds your income, it reduces your chances of getting approved. It is best to pay down as much debt as possible before applying for a mortgage. Also, keep in mind that just because you qualify for a certain amount doesn't mean that you can afford it.
2. Saving for a Down Payment
Before you even contact a realtor or meet with a loan officer, it's wise to begin saving towards a down payment. This is because there are benefits to doing so. When you have a bigger down payment, you're able to avoid the private mortgage insurance that is a part of your closing fees when you choose a home. Other benefits could include smaller monthly mortgage payments, lower fees, the ability to cash in on low-interest rates, and a better chance to stand out from other buyers.
3. Location Is Also Important
Another thing you should consider is the area you want to live in. It's important to research the statistics of certain neighborhoods before looking at houses. Consider the crime rate, proximity to your job and entertainment venues, the quality of schools in the area, and the demographics of the area you want to live in. When visiting certain neighborhoods, talk to the people who live there. They can give insight that realtors can't always give you.
4. Consider The Amenities You Want in a Home
This is something you should think about during the homebuying process. If your elderly parents are moving in with you, then you want a home with enough bedrooms and bathrooms to accommodate them. Or if you're an empty nester whose children all live on their own, maybe you won't need as many rooms. Other features you might want to include central heating and air, a garage, and hardwood floors.
5. Clean Up Your Credit
Since lenders review your credit history as part of the application process, you want to make sure that your credit is in shape. Obtain your credit report from these credit bureaus; Equifax, Experian, and TransUnion. Go over any debts you have and resolve to pay as many of them as your budget allows. When searching for a new home, don't open new credit accounts because this might not look good to lenders. Obtaining your credit score will also go a long way in ensuring that you will get the approval you need.
6. Get Pre Qualified by the Lender
When you receive a Pre-Qualification letter from the lender, it shows your realtor and the seller that you're serious about buying a house. To obtain this letter, you will need tax returns from the past two years, recent paycheck stubs, W2 forms, proof of down payment, and bank statements. To start this process, reach out to one of our expert local Loan Officers to go over anything further you may need. They can also go over various loan options that may be available to you specifically.
7. Find a Good Realtor
You want to research and interview different realtors before choosing one. Get referrals from the realtor's previous clients and inquire about their satisfaction with their service overall. Look for a realtor who is reliable and who will focus primarily on your needs and interests during the process. The best realtor will also have an understanding of the current market as well as the neighborhood you're interested in.
With these strategies, you'll be an informed and confident homebuyer.