Make Buying Your First Home Simple
Buying your first home can be one of the biggest commitments of your entire life. However, when a buyer is well-informed of the home buying process, they’ll have the information and confidence needed to apply for a mortgage and shop for a new home. Here are a few points to consider when buying your first home.
How much home can I afford?
Before you start shopping for a new home, it’s important to find out how much home you can afford by being approved by a qualified mortgage lender. A rule of thumb in the mortgage industry is to keep your proposed monthly mortgage payments (Principal, Interest, Taxes, and Insurance, or PITI) no more than 30% of your gross monthly income. The last thing you want is to be in a new home you can’t afford.
Prepare yourself for the mortgage process.
Check your credit, and if there are any issues on your report, you’ll want to address these items with your mortgage lender during the loan process. One way to improve your scores would be to pay down on your revolving accounts or credit cards. Also, you’ll want to avoid opening any new lines of credit or credit card accounts, as this could also affect credit scores. You’ll need to gather the most recent two years of tax returns and related W2s, recent paystubs, bank statements, investment statements, etc.
Shopping for a mortgage.
It pays to shop for a mortgage prior to finding your dream home. All too often this step is overlooked and the pre-approval process is started after a home is found. Keep in mind that there are many loan programs available requiring as little as 3.5% to $0 down.
Shopping for a new home when pre-approved.
Shopping for a new home can be an exciting yet stressful experience. Therefore, exercise due diligence when choosing your real estate professional, as he/she can help you remain within your pre-approved loan amount, while finding the ideal home.
Making an offer.
Your real estate professional can help you decide what should be offered for the house along with any additional conditions you may want to include in your offer, e.g., seller contribution to closing costs, seller repairs to be made, etc. If you reach an agreement, you’ll be required in most cases to submit a good-faith or earnest money deposit to begin the purchase process.
Obtain a home inspection.
Even if the home you’ve chosen to purchase appears to be in great condition, a professional home inspection should be completed. If the home inspection uncovers serious defects not disclosed by the seller, you may be able to rescind your offer and get your deposit back, or renegotiate the contract by having the seller make repairs or adjust the purchase price.
William Kyle is a Mortgage Advisor with Commerce Home Mortgage. He can be reached at (404) 557-8086 or by email at firstname.lastname@example.org. NMLS # 334836 www.commercemtg.com/wkyle
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