Buying a house is the largest purchase people make. Knowing a few pertinent facts before the lady of the house hangs the “Home Sweet Home” sampler on the wall just makes sense. Prospective home buyers will need three things before they begin: a real estate agent representing buyers, an updated and repaired credit report and an inspector.
About the Money
Whether first-time or seasoned-pro home buyers, you will both need around 10% to 20% of the sale price of the house saved up for a down payment. Additionally, approximately 10% of the sale price needs to be put away for closing costs. Lenders also like to see prospective buyers save money for unexpected home repairs or just the unexpected. Figure on saving each month at least 2% of a home’s sale price for emergencies.
The real estate agent representing the buyer will have a calculator detailing mortgage costs according to income and debt ratio. The professional will also tell prospective buyers that they have a choice at closing: to pay additional points in return for a lower interest rate. This may be a big bite at closing but will pay off in the long run. The real estate agent will also ask the prospective home buyer to get pre-approved for a loan. This involves using income, credit history and debt as the basis of a decision so the buyer knows right off the bat what he or she can afford to offer for a house.
Lenders look for a credit score of 720 to 750 or above to qualify for a mortgage. Those in the 660 to 680 range might pay a little higher points, fees and mortgage payments, but a mortgage is not out of the question. Even buyers at 560 or so would qualify for a mortgage but would pay more. Prospective buyers should pull their credit reports and spiff them up. Don’ apply for credit at least one year before you want to buy a house. Keep that rule in place after you get a mortgage for the obvious reasons.
A Home Inspector
The bank will have the home inspected to make sure they’re not in on a losing proposition. The home buyer should have his own inspector who will tell the prospective buyer if the home has hidden problems such as pests, termites, mold and mildew or structural problems due to land settlement.
Prospective buyers should research homes in the area, schools, highway systems, weather patterns and much more in order to know what to expect down the road so search Remax properties. If a major road system is planned going through the back yard or ice dams have proven problematic in the past, the buyer would need to know.