4 Tips to Remember when Purchasing a Home
Purchasing a home is the largest purchase you will most likely make during your lifetime. If you've saved money along the way and are now ready to take the plunge, here are 4 things you should know before purchasing a home.
- Credit goes a long way
Correct any issues or mistakes on your credit report and make sure that all credit items are paid on-time and in the full amount. You can pull your credit report at any of the three credit reporting agencies: Experian, Equifax andTransUnion. You may discover that something is on your report that was not purchased or opened by you. Typically, it takes a few months to get mistakes taken off and for your credit report to go up in score. The cleaner your credit report history is, the easier it will be on you to purchase your home.
- Get pre-approved
Before even beginning your home search, talk with your mortgage loan officer to get pre-approved. You may think you can afford a much larger and more expensive home than what is approved on paper or vice versa. Then, you can make a better judgment of the homes in your price range and make a serious offer on the house you want. Plus, during this time, you can speak with your loan officer about rates and what you may qualify for when the time comes to putting your loan package together.
- According to CNN Money, the rule of thumb is that you can buy housing that runs about two-and-one-half times your annual salary. Make sure you're not getting in too deep though, because if you like to travel, shop or spend extra money on entertainment, you may want to spend less on your home to free-up the extra income. The point of purchasing a home is to not feel trapped or "house poor," but to enjoy your home and social life outside of the home. You can use this calculator for a general idea.
- Hire a home inspector
When purchasing your home, hire a home inspector to make sure there aren't any problems with the home. A home inspector can tell you if you will have any major or minor repairs in the future and how much they could cost. For example, if you're thinking about putting a bid on a home and the foundation needs to be repaired, you could spend thousands of dollars on that alone. It may sway you to keep looking rather than purchasing the first home you've put a bid on.
All in all, if you're thinking about purchasing a home, there are many things to think about such as school districts, how far your drive will be from work and even yard maintenance. But, the most important piece to the home purchase puzzle is doing your research before going to the table to start the loan process.
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