02 Jan 7 Steps to Be Ready to Buy a House in 2018
A credit score is a numerical representation of your credit report. FICO scores range from 300 to 850, and the higher your score, the better. Good credit is like gold when obtaining a mortgage. Typically, you’ll get the best interest rate on a loan if your score is 740 and above. “A higher credit score should net you a lower mortgage rate,” says Lee Gimpel, co-creator of The Good Credit Game, which specializes in financial education. “That lower rate, even if it’s only 1 or 2 percent lower, can mean saving thousands of dollars per year.” If your credit score falls short, get busy repairing it. Correct any errors that might be on your report, start paying all your bills on time, and get your credit limit raised. Note, though, that you shouldn’t max out your card each month. It’s best to use 30 percent or less of your total available credit.
2. Don’t open new credit cards.
Tempting as saving at checkout can be, opening new credit may hurt your chances of getting a mortgage, or at least of getting the best rate on a loan.
“By opening the account, you have created another line of credit,” says Paul Anastos, president of Mortgage Master, a division of loanDepot, a nonbank lender. “That credit line, and what is borrowed, can change the application numbers and jeopardize the application.” What could save you a few dollars now could cost you far more in the long run if your mortgage payments will be higher.
3. Save the cash from your tax return, skip vacation this year or ask for birthday or other gifts to be given in cash
Besides the mortgage loan, you’ll need a sizable amount of cash to buy a house. There’s the down payment to consider, closing costs, and moving costs. You should also set aside money for unexpected repairs and costs, says Brian Betzler, regional sales manager at TD Bank. Not being prepared “is probably why nearly half of millennials incurred up to $5,000 in unexpected costs during the mortgage process, according to a TD survey,” he says.
A potential solution? Bulk up that emergency fund. You might be getting some money back after you file your tax return. Don’t blow it on vacation. A tax refund is a great way to add to your cash reserves for a down payment. Ask relatives to help you save for a home this year by not sending birthday or other gifts. Small sacrifices in the short run may mean the chance to own sooner than later!
4. Call Wemert Group Realty sooner than later… even if you think it may be months before you can buy!
Getting in touch with an agent now and discussing your needs and how you can partner together to meet them will help you accomplish your goals. Wemert agents are THE best in the business and have access to many additional resources which may even help you reach your goals quicker than you anticipate. In this market, you need an educated professional who will keep you from over paying and who can help guide you through the process every step of the way.
5. Keep tabs on interest rates.
If you hear that interest rates are at historic lows or that interest rates are on the rise, you should not assume that you can get the rock-bottom rate. Not everyone gets the same interest rate on a mortgage loan. It depends on your financial picture and on the lender you choose. Most folks know that home prices are, at least to some extent, negotiable, but we find loans to be the same. We advise that homebuyers shop around for the lowest interest rates. Note that closing costs can vary too, so discuss with your Wemert agent creative ways to keep yours down.
6. Find a mortgage lender.
Before you even start looking for a home (and yes, we even mean browsing online listings), look for a mortgage lender to find out if you can afford to buy a home. If you can’t right now, there’s no use torturing yourself by finding your dream home that’s just out of reach. But how do you find a lender? If you don’t know where to start, we are happy to refer a list of some local lenders to you. Compare [that lender] with two others. Once you know how much home you can afford, your agent can set you up on a comprehensive home search based on your preapproval amount or less based on the budget you discuss together.
7. Get preapproved.
When a lender gives your financials the once-over and preapproves you for a mortgage, you’ll be able to show sellers that you really can buy their house. But how do you get preapproved? By preparing a few documents, which you can do several months in advance of the actual purchase. Here is a list of some of the basic things you will need to gather if you would like to buy a house. Your mortgage professional may request other documents from you during the process.
Tax returns for the past two years
W-2 forms for the past two years
Paycheck stubs from the past few months
Proof of mortgage or rent payments for the past year
A list of all your debts, including credit cards, student loans, auto loans, and alimony
A list of all your assets, including bank statements, auto titles, real estate, and any investment accounts
If 2018 is your year to buy a home, or if you know someone who would like to buy a home…
We encourage you to connect with us NOW! Our team will work tirelessly to help you meet your goal of homeownership. Our agents will over turn every rock necessary to find you the perfect home, in budget – on your timeline. We promise to partner with you every step of the way to make this process as easy as possible.
Connect with us today by calling 407-412-8488
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