Are you looking to be a house for yourself? Before you start looking for the best property, you need to be prepared with the steps that can help you in the process. You need to have your finances ready and aligned for the investment, you need to know exactly what type of home you want, choosing the right online real estate agent, etc.
As part of checking the financial position for the house buy, first, you need to check your credit score. This the top of the list to-do of the house purchasing process. Your credit score determines and indicates to your lenders if you have a good history of paying back your dues. It will let them make a decision and identify if you have the capability of repaying the mortgage. If your credit score is low, then you might not be eligible for a loan or you might struggle to get a loan. You might also need to pay a higher interest rate if your credit score is low. So, in order to make a decision, you definitely need to know your financial options and position.
While purchasing a house, usually the payment of down-payment is involved. 20% is usually the down payment that is applied for purchase in the market. It is recommended that you try for a 10% down payment deal. However, until the 20% equity on the property is reached, the payment of the private mortgage insurance might still be required. You can also acquire the services of a loan professional for consulting about the down payment you should be making.
Next, before starting to search for a house to purchase, you need to make sure that you have all the necessary documentation ready. The documentation will include all the files that will basically prove your income and your ability to repay the loan. You will be required to present your documentation to the mortgage lenders that you will be contacted for the loan. The documentation stack includes W-2s, Bank Statements, tax returns, etc.
The most important question you will need to ask yourself is, how much you can afford. Do the calculation with the numbers of down payment, expected interest rate, debt to income ratio and expected monthly expenses. We recommend following the 28/36 rule. This means that you need to make sure that your monthly expenses do not exceed 28% of your gross monthly income and your monthly debts do not exceed 36% of your gross monthly income.
Although unforeseen and unexpected circumstances can still occur and can affect your calculations, however, the 28/36 rule is a trustworthy way to keep track of how much you can afford.
Finally, you need to choose a proficient, experienced and trustworthy online real estate agent. Your real estate agent will help you in finding a good house at a reasonable price. While communicating with your real estate agent, you should make sure they understand all your needs and requirements. Your real estate agent should also have coverage of the area you want to buy a house at.