Buying a new house is a big financial decision. Here is a list of 4 must-do steps, provided by the experts at Rex Homes, that will help smoothen your purchase process and get you closer to purchasing the home of your dreams.
- Check your credit score
The first step that you should complete even before you start looking at potential houses is checking your credit report. It is recommended to start working on your credit score at least a year before you plan to buy a home. This will give you enough time to improve your credit score or correct any inaccuracies. Most mortgage lenders require you to have a credit score of at least 650 or higher. You can qualify for a low-interest mortgage rate if all your financials are strong and you have a score of 740 or higher.
- Determine what you can afford
The mortgage that your bank will approve is dependent on your debt-to-income ratio. Financial experts recommend that the total of your monthly house payment including principal, interests, insurance, and taxes should be no more than 28% of your monthly gross income. Banks also review if you have any other debts such as car loans, student loans, and credit card payments when approving your mortgage. Hence, to receive a favorable mortgage interest rate, it is suggested to have this amount below 36% of your gross monthly income.
- Get pre-approved for a mortgage
You can convince the seller that you are truly interested in the house by keeping your financial documents organized and getting a mortgage pre-approval. This pre-approval is a conditional commitment provided by the lender that the buyer will receive a specific sum based on the information provided. It is important to note that a mortgage is not guaranteed by getting a pre-approval.
- Scan all potential neighborhoods
It is important to stay informed about the neighborhood where you plan to live and know if there are any other available houses, what are the housing prices in the locality, and so on. It is suggested to scout the area where you are planning to buy a house by visiting it during the day and at night. In addition, you can test your work commute, check the surrounding recreational areas, schools, shops, and talk to the residents who are already living in the locality if possible. While it may seem like a task to scan all potential neighborhoods, it will benefit you when you are ready to make your purchase decision.
How Can A Good Mortgage Professional Help You?
Buying a home is not as simple as buying clothes from a store. If you are planning to buy a new house it is recommended to hire a mortgage professional who can provide advice on the steps that you should follow to ensure a smooth purchase process. Besides, a knowledgeable mortgage professional will help in evaluating your finances and finding the best mortgage deals that suit your budget. A seasoned professional will also provide valuable guidance and insights to boost your credit score thereby getting you closer to your home buying dreams.