If you’ve always been a renter, the thought of buying a home can seem overwhelming. Where to even start is the big question? PHD Realty is here to help you feel confident as you begin your journey to homeownership with the coming new year. Here are the top 5 things you’ll want to know before starting your search.
KNOW YOUR CREDIT SCORE
While it’s not the only factor, it is one of the main factors when it comes to getting approved for a loan. Getting your free credit report from one of the major reporting agencies won’t hurt your credit and is a great way to know where you stand. It may be a good idea to get this about 3 months in advanced so you have time to improve your score, if need be, before proceeding onto the next step.
UNDERSTAND A MORTGAGE
A mortgage is a loan, or borrowed funds, given to you by your bank or lender. These funds you’ll payback under certain terms and conditions through making monthly payments. Mortgages can come in different forms. Those common to a real estate transaction are:
• Conventional loan- A loan with no private mortgage insurance and requires a down payment
• Adjustable Rate Mortgage (ARM)- Interest rate and monthly payments change, typically, every year
• FHA Loans- Available to all types of barrowers, not just first time buyers, with a low down payment, typically 3.5%, but monthly payments include mortgage insurance.
• VA Loans- Similar to FHA, but these are for veterans and their families with no down payment
• USDA- For rural residents who meet income requirements with no down payment
Keep in mind, additional expenses like taxes, insurance and utilities when calculating your monthly budget.
KNOW WHAT YOU CAN AFFORD
Now that you know your credit score and understand a mortgage, get preapproved for a loan with confidence. Preapproval is valuable because it means your bank or lender is prepared to lend you a specific amount. Most sellers will not accept an offer unless it’s cash, or provided with a preapproval letter from a lender. Discuss which type of mortgage would be best for you with your loan officer.
CONSIDER PROFESSIONAL HELP
Realtors are a wonderful resource when it comes to knowledge about the local real estate market and community. They’ll ensure you’re prepared to make an offer, guide you through the process of the transaction and help keep you protected as a buyer. Do your research on different Realtor offices in the area you’re interested in, and pick the one you feel will represent your best interest.
NARROW DOWN YOUR CHOICES
Your journey to homeownership doesn’t have to be a long one. Make a list of specific needs and wants that will make up your dream home, but don’t be afraid to compromise. The perfect come will cost the “perfect” dollar. It’s ok to settle for slightly older cabinetry that could be easily updated with a coat of paint. Have an idea of where you’d like to live, how many bedrooms you’d like to have and any other features that are a necessity for you. Communicating these with your agent will help them take all the hassle out of finding you a new home.
Now that you’re all prepped and ready to go, visit our RESIDENTIAL page and call an agent today to kick off your 2019!
Call PHD Realty at (251) 368-1063 today!