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Owning a home can be a satisfying experience, but it is essential to be prepared for this important milestone.
1. Carefully analyze the pros and cons of buying a home to continuing to rent, and decide if buying a house is the right decision for you and your family.
2. Analyze all aspects
Although buying a home can be rewarding, it can also involve much work and be very expensive. Leaking leaks, pipe problems, and other repairs imply expenses that accumulate. When determining if you are prepared to own a home, consider the cost of general maintenance tasks and unexpected expenses.
3. Check your credit
Analyze your credit report and your FICO score. They will affect the total cost of your loan. Once you obtain your free annual credit report, review it carefully for errors or unresolved issues, and contact the appropriate credit reporting office, Experian, Equifax or TransUnion, to request a correction. You can obtain your credit report in each of these agencies if you visit AnnualCreditReport.com.
4. Get your pre-approval
Being pre-approved before looking for a houses is very useful because it enables you to search for homes that are within your price limits. Real estate agents also value buyers who send offers for a house with a pre-approval letter.
5. Prepare a budget
While pre-approval allows you to calculate how much you may be able to borrow, being comfortable with what you have to pay per month is just as important. Before applying for a loan, especially a credit of the size of a mortgage, it is essential to determine how much you can pay per month. Analyze all current monthly expenses, plus how much you save per month. Overall, it is beneficial to spend no more than 28 percent of your monthly income on housing expenses, including mortgage, taxes, and insurance. With our mortgage calculator, you can estimate the cost of monthly installments and put together a budget that is appropriate for you.
6. Do not forget about taxes and insurance
Contact a local insurance agent to prepare a quote using a comparable property in the area in which you are looking to buy. To get a better idea of how much you will pay taxes, check the tax assessor's website on the local property. Remember that the amount of taxes paid by an owner and what you may have to pay may differ depending on the exemptions granted under local tax legislation.
7. Make a down payment
Most mortgage programs require an initial fee for the purchase of a home. The amount of the initial payment required varies according to the type of mortgage program
8. Start the housing search
Decide the place and think about the characteristics you want for your home. Look at local notices, compare prices for similar homes, and ask your real estate agent to help calculate the amount you will have to pay. If you have not yet consulted a real estate agent, check with your friends, neighbors or with a local real estate agent's association to help you find one that specializes in housing options in your area.
9. Loan application process
In addition to deciding the type of mortgage you want to get and calculating your interest rate, gathering the required documentation is a fundamental step that saves you time and frustrations along the way. To ensure a smooth loan application process, you probably need to gather the following:
Name and address of the employer (s) of the last two years
Payment stubs for the previous 30 days to account for your income for the year to date and the current period, in addition to any additional income support documentation
Statements of checking, savings, retirement, and investment account for the last two or three months
Documentation of your credit cards, loans, and other debts
10. Close the deal
Once you find the house of your dreams there are certain instances related to closing the transaction, such as negotiating the purchase price, requesting an appraisal and scheduling an inspection. Once you reach an agreement with the seller, you should consider the closing costs. It usually includes start, title and settlement charges, taxes and charges that are paid in advances such as owner insurance and neighborhood association fees.Your real estate specialist can help you calculate all the costs related to the property.
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