There are a million and one things to keep in mind when buying a home but if house hunting is causing undue stress, take a deep breath. You can cross the threshold to homeownership by focusing on the basics.
To help you, we’ve compiled a list of the essential things to keep in mind when buying a home.
Things to Keep in Mind When Buying A Home
1. It’s Important to Have Your Financial House in Order and Getting your head right to begin!
Mortgage lenders primarily look at two things when deciding whether to approve an application: your credit score and your debt-to-income ratio (DTI). While you can get certain mortgages with bad credit, a low score will get you a high interest rate. If your finances are lacking, try paying down some debt before your house hunt.
2. Setting a Housing Budget Requires Careful Calculation
You’ll need enough cash on hand to cover a down payment, plus closing costs. Unless you will be taking advantage of your veteran privileges and using a VA loan. VA guidelines allow the buyer to put zero down. There are also other loans products that do not need a down payment but do not forget you will need to have money for inspections and earnest money (your good faith deposit that goes with the offer). Beyond that, you’ll want to consider your income, credit score, Debt to income ratio, property taxes, private mortgage insurance (required when you put less than 20% down) and moving costs when finalizing how much house you can afford. If you’re not sure where to start, there are some solid calculators online that can help you set a budget.
3. A Good Realtor Goes a Long Way
A realtor can be extremely helpful when buying a home. They can scout out neighborhoods, learn the local markets, craft offers, and put out any fires that pop up. Plus, your realtor can suggest other reputable service providers, like potential mortgage brokers, home inspectors or settlement and title insurance services.
4. Pre-Approval Is Important
A mortgage pre-approval letter certifies that a lender has reviewed your information. Most often you will do a basic online application and your credit will be pulled. Once you have an accepted contract on a home the lender will send you a list of all the documents you need to gather for the lender. If you are PCSing keep in mind you will need access to the last 2 years of taxes, all verification of employment, any documentation proof of any medical disability the VA buyer might have. The pre-approval letter doesn’t guarantee the mortgage will get fully approved, but it does let a seller know you’re a serious buyer worthy of consideration. Plus, it gives you an idea of what you can buy for the mortgage payment you are comfortable paying.
5. You Can Rate-Shop
Credit scoring models treat mortgage applications made in the same 30-day to 45-day window as one inquiry, so you can shop around for the best rates and terms on a home loan without doing big damage to your credit. The best bet is to ask your realtor for a local lender that they trust to prioritize your best interest. They know they are honest and a good track record is huge! Sometimes a lender that is local has a tremendous advantage over a corporate entity because everything will move much faster through their system. Expediting paperwork can be a big time-saver. Sometimes 30 minutes makes the difference of losing a deal or WINNING!
Bonus Things to Keep in Mind When Buying a Home
Even in a buyer’s market, finding the right home can take time. Don’t get discouraged if your dream abode isn’t among the first crop of homes you visit. It is our goal to limit the time invested running through homes, to help with this, we are offering virtual home hunting. If you are interested in shopping private tours from your sofa let Missy know immediately! Similarly, it is not OK but it might happen that your first few bid does not get accepted. Your home is out there! Again, a good Realtor can help you review listings, refine your wish list, and craft offers more apt to stand out in a competitive market.
If you’re looking for the perfect property in Fredericksburg, Stafford, or Spotsylvania, Virginia contact us and let’s get to work ASAP!