Are you someone who is looking for an instance to prove the old adage that market busts offer opportunities on buying a home for all the smart investors? Well, if answered yes, you’re someone who will be blatantly disheartened, as the current housing market is not going to provide you with such favorable opportunities. More often than you might think, for starters and novices, even the thought of owning a home in the present housing market doesn’t make any economic sense. Even though your calculations and computations might indicate that owning a home will be a rather smart move, there are ways in which you can make the entire process more affordable. Though the challenges of buying a home might seem to be intimidating and daunting for a first-time home buyer, here are some points to demystify the process and some handy tips that can facilitate the process of buying a home.
- Determine the type of home that suits your needs: While you’re in the market to purchase a residential property, you have plethora of options like a townhouse, a condo, a single-family home or a building with two or more units. Each option has its own benefits and pitfalls, depending on the goals of the homeowner. Hence, you need to decide the type of property that will best cater to your home ownership goals.
- Calculate the mortgage amount that you can qualify for: Before you start shopping around and getting multiple mortgage quotes for applying the loan, it is vital to get a clear idea of the amount the lender will actually be willing to offer you. According to your thoughts, you might feel that you can afford a home of $300,000 but lenders might be of the opinion that you’re only ideal for $200,000 depending on some other factors. So, get a clear idea by getting pre-qualified for a mortgage loan.
- Evaluate your liabilities and assets: You might not have too much debt and you might be current on all your payments. But what is the way in which you spend your dollars? Do you have huge amounts of dollars left at the end of the month or are you living on a shoestring budget? As a first time home buyer, you should have a good idea of what is coming in and how much you owe your lenders and creditors. Gather all the documents like your pay slips, W2s and check your net worth.
- Watchfully check your credit score: Last, but not the least, you would require checking your credit score. As you’re entitled to getting free copy of your credit report from the 3 credit reporting agencies, you should order one and carefully review them to locate the errors. Dispute all the errors that are plummeting your credit score and thereby see a hike in your score. The higher is your credit score, the higher will be your credibility and hence the lower will be the mortgage rate that’ll be offered to you.
Before you sign on the dotted line with a particular mortgage lender, make sure you get multiple mortgage quotes, calculate “how much house can I afford” with the help of an affordability calculator and look for ways to enhance your savings. Meanwhile, don’t forget to manage your finances and repay the mortgage on time to avoid a bad hit on your credit score.
For more discussions on home affordability, loan modification and mortgage related topics, you may want to check out MortgageFit on G+