f you are buying a house for the first time, the buying process can be confusing and overwhelming. But, as long as you take time doing your homework, you could easily overcome the confusion and make an informed decision. The tips below should help you make the right choice.
Know How Much House you can Afford
Before you begin your home search, know what is within your price range. Use an online calculator to know the amount you can safely afford to spend on a house.
Compare Mortgage Rates
Comparing mortgage rates from a minimum of three lenders will help you find the best rate that works for you. This will help you save money over the life of your loan. When you compare quotes, ask the lender if they let you purchase discount points that would allow you to pay up the interest in advance to get a lower interest rate on your mortgage. Check out this page for more information.
Obtain a Pre-Approval Letter
A pre-qualification for a mortgage loan will provide you with an estimate of how much a lender can lend based on your debts and income. However, when you get closer to a house, make sure you get pre-approved which means that your chosen lender will examine your finances thoroughly and makes a written confirmation of their willingness to lend you and under which terms. Your pre-approval letter will make you look more serious as a home buyer, giving you an upper hand over others who skipped this step.
Put Enough Down Payment
Focus on putting at least 20% down payment to increase your chances of getting a pre-approval. This also helps you pay less in your monthly mortgage payments. A good down payment will save you from the stress of dealing with monthly dues that might be too heavy for you to bear. In case you haven’t saved enough down payments, there are down payment assistance programs you can benefit from.
Stick to your Budget
Once you start searching for a house, make sure you don’t spend on a house that is costlier than what you have planned to buy. In a competitive market that has limited inventory, you may bid on homes which get several offers. After finding your desired house, you can be tempted to make a high-priced offer which can make you win the game. However, shopping for a home that is below your preapproval amount will only make some wiggle room or bidding.