Buying a home can be intimidating – especially if you’ve never gone through the process before. With so many factors involved, such as financing, paperwork & deadlines, it’s important to know what to focus on and where to start.
If you’re thinking of purchasing down the road, then you should focus on two things: preserving your credit score and saving for a down payment. In order to qualify for the best rates, you will want your credit score to shine. If your credit needs some help, there are many ways to improve it, such as paying off debt & making payments on time. These steps will also help with the mortgage process by improving your financial health. In fact, as the following chart shows, the average credit scores for home buyers is pretty high.
Once these are set, then it’s time to identify a great real estate agent. It’s extremely important to have a knowledgeable professional by your side. You need someone who has a proven track record & can walk you through the steps, such as getting pre-approved for a mortgage. A great agent can give you names of mortgage brokers that have successfully closed loans. Fifty percent of a successful transaction depends on who is representing the buyer.
In terms of financing, there are many mortgage options, but one thing will never change: the higher your down payment, the stronger your offer will be, and the lower your financing costs will be. A typical down payment will range anywhere between 3.5% to 20%. The earlier you start saving for a down payment, the better your position will be when the time comes to purchase. In order to avoid PMI (Private Mortgage Insurance), you will have to put down at least 20%, so it’s never too soon to start saving. The next chart shows that financing costs, down payments, and credit scores go hand in hand. If you have 20% down, you will have to pay more in fixed costs (points, etc.) the lower your credit score is.
When seriously searching for a home, it’s important that you don’t take on any new debt, make large purchases or switch jobs. All of these things can negatively impact the mortgage process. Always remember that a bank will want to lend you the most amount of money. Make sure your budget is set and stick with it. No one wants to be “house poor.”
Lastly, you will also want to build an emergency fund. Once you move into the home, all of the “extras” will start to add up. You need to be prepared for any repairs, home maintenance or even high utility bills. Think of it as a fund for a rainy day.
While it may sound like a lot, with the right professional by your side, you will be home in no time.
Jeannie Kasindorf | Partner
Auslander Kasindorf Group | Keller Williams Realty
203-504-3067 (office) 203.253.2116 (cell) | Jeannie@AuslanderKasindorfGroup.com
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