With rent prices going higher and higher all renters are going to reach a point where enough is enough. When a rent payment is more than a monthly mortgage payment and they have nothing to show for the thousands of dollars at the end of a lease, frustration mounts. Many would-be buyers shy away from the daunting process of home buying as lenders put buyers through more scrutiny than ever before. But with high availability of homes, now is the best time to go through the extra effort to buy a home. When contemplating jumping into the home buying pool, please consider the following tips will help you get prepared for the home buying process.
Tip #1 – Create a Home Buying Budget!
This is pretty easy if you already have a budget that includes your housing expenses. If you don’t have one yet then start by keeping a daily log of your expenses and spending for a four week period. Most banks and lenders will check that your monthly housing expenses are less than 28% of your monthly income. If you just over this threshold you may be able to fix it by looking at what you can cut out of your budget to make a home purchase affordable. Keep in mind that a housing payment can be less than what you are paying for rent and it might bring you in line with that threshold.
Tip #2 – Get Prequalified For a Mortgage
Many home purchases fall through because buyers find their dream home before they secure a loan. Shop around to three or four lenders and compares the rates and loan types offered. After finding the right loan for you, the lender will issue a letter telling you, and sellers, the amount you are qualified for. Being prequalified lets you shop with greater confidence and move quickly on your dream home. Sellers feel more confident dealing with you as it will speed up closing and reduce their costs.
Tip #3 – Get to Know the Neighborhood
While searching for homes within your price range, your agent may show you a home in the part of town you are not as familiar with. You may fall in love with the home, yard, garage and view but you should research the neighborhood itself. Bad neighbors, crime rates and poor schools can have a negative affect the value of a home. Check with online databases to see how the neighborhood stacks up.
Tip #4 – Understand the Costs After Closing
Most buyers get so excited by the home buying experience that they lose sight of what their actual monthly spending will be AFTER the closing is completed. In addition to a monthly mortgage payment you are going to have insurance, taxes, HOA (Homeowners Association) fees, and maintenance fees to keep the house in working order. These costs should be considered so you do not spend every available dollar on a mortgage payment.
Tip#5 – Work With a Good Lender
Working with the right lender can make all the difference. An experienced mortgage lender like American Financing, with a record of excellent customer service and is known for providing a the most stress-free and hassle-free experience that is possible. Look for a lender with positive reviews and a good rating from consumer agencies like the Better Business Bureau.
Right now there are many viable and affordable homes on the market, with additional homes being added daily from foreclosures and new constructions. Stop paying your landlord’s mortgage and take advantage of low rates before they go away. Converting your rent dollars into a real estate investment is a smart choice.