Becoming a homeowner is a goal for most people, and it’s also a harrowing process. Finding the right home, applying for mortgages, and closing the purchase can take months of hard work and more money than you’d care to think about. However, the alternative is not buying a home, which is not an option for most of us.
Indeed, the home buying process is fraught with hurdles and red tape, but it’s all worth it when you move into your dream home. Continue reading to learn some things home buyers need to know before beginning their journey to homeownership.
Take time to prepare your finances and credit for lenders
As you know, a house is no small investment. Right now, the median price for homes is over $200,000, and you can expect your down payment to be between 3.5% to 10% of the home’s value. Even if your down payment is on the low end, 3.5% of $200,000 is $7,000, and not many people have $7,000 in disposable income at the ready.
Furthermore, you have to apply for a mortgage loan, and lenders will take a long and hard look at your credit history and finances before awarding you the necessary funds. Of course, the higher your credit score is, the better your chances will be of getting a great mortgage for the house of your dreams. However, a low credit score will make getting a mortgage loan harder, and you can expect to pay a higher interest rate on your loan, making your house even more expensive.
The key to success in the home buying process is to start preparing at least a year in advance. Start putting away money for a down payment and working on your credit score to improve your odds as a borrower.
Get a buyer’s home warranty with your new house
It’s easy to get so caught up in the excitement of buying a new house that you forget to think about practical things like what to do when something breaks down. Before signing on the dotted line and closing the purchase of your new home, you should speak with your real estate agent about getting a home buyer’s warranty.
What is a home warranty when buying a house? In short, it’s everything! A home buyer warranty protects your home from normal wear and tear and even covers major appliances like washers, dryers, HVAC systems, and refrigerators—all things you don’t want to be without in your new home.
Different areas have varying housing markets
One of the things many first-time homebuyers fail to recognize is the correlation between location and housing prices. Indeed, location impacts a home’s value as much as the size and design of the house. For instance, you can expect mortgage options in New York to be much more expensive than in Jackson, MS, even if the homes are the same size and in similar neighborhoods.
Two things you should consider before looking for a home in a new market are the median value of homes in the area and that job market’s median income. Cities and states with a higher cost of living tend to have a higher median income, nonetheless, it’s important to consider the financial implications before picking up the stakes and relocating to a new city.
Finding your dream home at a competitive rate is much easier when you know what to expect during the buying process and how to shop wisely. The keys to your success are to begin preparing well in advance of buying a home, understand the housing market, and stay within the bounds of your income. If you do those things, your dream home can become your dream come true.