If you’ve been thinking about purchasing a new home for your family, now’s the best time to do so.
If you’re a first-time buyer, all the better for you. For the first time in three-years, interest rates are increasingly low. Therefore, your prospective home will have a higher value.
Unsplash | The current market behavior is ideal for purchasing a brand new home for your family
However, even though the market is great for buyers, investing in a property is no cakewalk. You have to take it slowly, step by step. As is the case with all high-stake investments, research is key, and you have to prepare yourself before making any big decision.
Here are some tips that will point you in the right direction and help you get started.
1. Check Your Credit Report
First of all, you need to see what your credit score looks like. Anything under 700 means that it is low, and you might have a hard time with your loan getting approved. Having a low credit score can also limit the number of lenders who would like to help you out.
If you have a really bad credit score due to bankruptcy, outstanding loans, or high debt, you should hold off on buying a house at the moment. Take some time to focus on your credit score, try paying off your outstanding payments so that your credit score is high enough.
However, if you have an average or a good score, or if you’d like to apply for a loan despite your bad score, the next step is to look for lenders who deal with people with the same credit score as you.
2. Check Your Finances
When you are applying for a mortgage, you’d need this information anyway. You also need to know how much you can afford to pay off each month, and how much you can afford to borrow.
Unsplash | It is important to keep your finances and credit score in check
If you’re thinking that a lender will do all that homework for you and give you the best deal, think again. As a matter of fact, many lenders may try to grant you more of a loan than you can afford to pay back. Hence, you need to be on top of your game for the entire process.
3. Look For a Mortgage
The purpose of looking for a mortgage is not to compare companies to see which will lend you the most amount of money. There are many factors that you have to take into account such as, loan cost, broker fees (if needed), repayment terms, required deposit amount, prepayment penalties, etc.
Unsplash | Gather all your important documents before starting your application
Once the application process starts, you’ll also need to keep your vital documents handy. These include your employment verification, bank statements, proof of assets, pending loans, tax returns, investment earnings report, rental agreement, etc.
If your application is approved, an appraiser needs to be hired to make sure the loan amount is accurate based on the value of the house.