The American dream has long been to become a homeowner, but as with anything of a financial nature, requirements can vary between institutions, lenders, and brokers. While one bank may ask for 20 percent down, a mortgage broker may only require 10 percent. Since loans vary in requirements, stipulations, and types of homes available as family dwellings, it is good to know what you may face before you begin the hunt for the perfect house. Here are six things you should know before purchasing a home.
- Purchasing Expenses
The percentage the lender requires is not the only cost associated with purchasing a home, so it is wise tounderstand all relevant fees – including closing costs. Also, check out monthly insurance rates, property taxes, and association fees before you put every penny you have saved into a mortgage. You must also consider expenditures you will need in the first few months, such as appliances, furniture, and maintenance.
- Knowing Credit
Although it is not a widely broadcast fact, your credit score can be one of the most critical factors in what will determine the terms of your home loan. Most people with a score of 750 or over can usually find good terms and low interest rates that can save them up to 10 percent of the loan costs over the loan’s life. However, if you have a score of less than 700, it is important to find a way to raise the score quickly, so find a credit repair company and work with them to raise your credit score.
- Knowing Requirements
It is easy to get lost in the search for a home and fall in love with a house that doesn’t fulfill your needs unless you are firm and set the requirements with your realtor. To make sure you don’t wander into something you really don’t want or can’t afford, know what type of home you require, where it needs to be located, and what restrictions must be included. For example, you may want a condo with a garage that is located in an area near a park. If you tell yourself what you want, repeating it out loud several times, the chances you will get lost in a property search will diminish.
- Getting Pre-Approval
Most first-time home buyers don’t know they have an option to get a pre-approval before searching for a house.A pre-approval is a letter or notice from your lender that states the institution will back you for a certain amount of money. That letter lets the homeowners know you can afford to purchase the home and won’t get turned down during the process. This is not the same as a pre-qualification, rather your lender will verify your income, credit score, and employment history before issuing the pre-approval letter.
- Understanding HOAs
More than ever before, homes are being built in neighborhoods that are an inclusive unit covered by a homeowner’s association. Condos are almost always a part of an HOA, too. These associations often take care of property maintenance, pools, and parking areas using the dues you will be required to pay. If you areconsidering an area with an HOA, ask neighbors about how the neighborhood is run and what that person thinks about the HOA requirements.
- Inspecting Importance
One of the most critical things you can do before purchasing a home is have an inspector check the property. The problem is that not all inspectors are created equally, and some are terrible at what they do. Make sure you have a certified and qualified inspector that is bonded and licensed in your area, and a professional that works for you – not the seller. If you are uncomfortable with the report you receive, ask for a second inspection by someone you hire and feel you can trust. There is nothing wrong with obtaining a second opinion.
Buying a home is a huge decision and may be the largest and most expensive purchase you will make in your lifetime. That is why it is important to take your time and make sure you know what you are getting into before you sign on the dotted line and commit yourself to 30 years of monthly payments. Knowing what you are committing to can help you make a wise financial investment in your future.
Message me if your thinking about buying a Fort Collins or Loveland home at m.me/EdPowersRealEstate