Whether you’re a first-time homebuyer or are looking to upsize or downsize your existing home, buying a home can be easy if you’re prepared. Save time and money by simply doing a little research and planning before you purchase.
Follow these three simple tips to make your home buying process quick and easy.
1. Figure out how much you can afford
There are many resources available to calculate a monthly mortgage payment. You can enter the loan amount, desired term and interest rate to calculate the monthly payment. From there, you can back into a payment you are comfortable with by adjusting the term or loan amount.
A good planning tool is to create a budget that includes your mortgage payment, home insurance, property taxes, and anticipated utility expenses along with your ongoing debts to make sure you are comfortable with your monthly expenses.
Get approved before you shop. Loan approval is dependent on many factors. In general, lenders review your income, current debts, the amount of the down payment, and your credit score. Lenders pay close attention to your debt-to-income ratio (your monthly debts divided by your monthly pre-tax income) and prefer a debt-to-income ratio below 50%. The lower it is, the less risky it is for the lender, and the more favorable your terms may be.
Once you decide on a comfortable payment, you can narrow your search and only shop for homes within your price range.
2. Maximize your credit
If your credit score isn’t where you’d like it to be, there are several things you can do to improve it. First, get a copy of your free credit report, look for any discrepancies or errors, and work to have them corrected. Second, pay off any past due balances and/or low balances to improve your payment history and lower your debt-to-income ratio.
Removing inaccuracies and paying down balances can help improve your credit score, which can help you qualify for your desired loan type.
3. Use a lender you trust
Some lenders can guide you into products that are in their best interest instead of yours. Mortgage brokers may be offered incentives from lenders to drive consumers into a particular product. That’s why it’s important to work with a lender you trust. At Pacific Service Credit Union, we don’t work off commission and always offer products that meet your requirements. We offer a wide variety of home financing options including jumbo loans, second homes and investment properties.
The more information you have at the beginning of your search, the easier the entire home buying process will be. Happy house hunting!