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Buying home? The things you absolutely need to know | Payitless.com

Buying home? The things you absolutely need to know

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Buying a home is a very complex task for anyone, especially if it’s your first time ever; it involves a whole series of interrelated steps, starting with putting money aside and the deal closed. Our brief advice is mainly aimed at those who are facing this undertaking for the first time. How to prepare for the purchase, how to choose the mortgage and how to behave when buying the house.

Setting aside a basic amount

Depending on the type of mortgage you are going to choose and from which institution will grant it to you, the down payment can certainly vary. Consider that for new home buyers, with a good credit score, a down payment of around 3% may be sufficient. Of course, this small percentage can be difficult to set aside if the dream home costs a lot. Also keep in mind the fees you have to pay to finalize the mortgage, which can be around 2% to 5% of the loan amount. And then there are the expenses for initial renovations, moving and possibly furniture, which must be paid off in cash after the home purchase.

Determine what home you can reasonably afford

How much can you really commit – safely – to your first home? Establish a price range based on your income, debt, down payment, credit score and where you plan to live.

Check and strengthen your credit

Based on your credit score, you’ll know if you’ll be granted a mortgage and this will weigh on the interest rate you’ll be charged by lenders. You can still improve your credit score, however, by getting free copies of your credit reports from the agencies, paying your bills on time, and keeping your current credit cards active.

Choosing a Mortgage

Looking at the various forms of mortgages granted by lenders, there are several types available, depending on the down payment percentage, eligibility requirements and other options.
Conventional, non-government-guaranteed mortgages can require down payments of up to 3%; loans insured by the Federal Housing Administration require down payments of up to 3.5%; and loans for rural homebuyers usually require no down payment at all. In the states, there are mortgages dedicated to special categories of people, such as veterans of military service, that require no down payment. As for the duration of the mortgage, you can choose from a short term of about 15 years to a longer term of up to 30 years. Keep in mind that a 15-year mortgage generally has a lower interest rate than a 30-year mortgage, but the monthly payments are larger.

Request a pre-approval letter

A mortgage pre-approval is an offer from a lender to lend a certain amount under specific conditions, and it shows home sellers and real estate agents that you are a serious buyer, and is a definite advantage. Therefore, request this document as soon as you are serious about purchasing a home.

Choosing a good real estate agent

Rely on a good real estate agent who will help you find the home that meets your needs and support you in negotiations. It’s best if you use at least two qualified brokers, whose experience will help first-time homebuyers.

Choose the right home for you

Consider the pros and cons of different types of housing: while a condo may be more affordable than a detached home, you’ll certainly enjoy less privacy, compounded by shared expenses. In the case of a fixer-upper single-family home, which are priced lower than homes in a good state of repair, you’ll need to budget extra just for renovations, which, however, can be financed along with your home purchase mortgage. Consider your long-term needs and whether an initial or permanent residence is best for them. If you plan to start or expand your family, it might make sense to purchase a home with more room to grow. Check out potential communities well. Choose a service that is important to you and experiment with commuting to work during peak hours.

Published: 11/22/2021From: Editorial staff

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