4 Things You Must Know Before Buying A Home
Buying a home is an exciting first step for many families, but finding the perfect home for your family can be challenging. In fact, many cite home buying as one of the most stressful things they ever did!
Finding the perfect home isn’t impossible, but it can be stressful! Square footage, lot size, HOA fees, all play an important role in your final decision but only after you have decided the 4 things you need for your home. While price points and layouts are important aspects of home shopping, many of the aspects of your home buying process won’t include the house itself.
The most important parts of a home, are the ones you should know before you even look! When talking to your realtor, cover these 4 things to find the perfect home for you. These 4 things make buying a home easy, as you know what makes a perfect house for your family.
Before you begin your search for buying a home, you need to know your credit score. Credit scores are very important in the home buying process. Credit scores are used by your mortgage lender to determine your rates, and what kind of mortgages are available to you.
The standard mortgages tend to fall into these categories: conventional, FHA, and VA loans.
Types of Mortgages
A conventional loan is a type of mortgage loan that is not insured or guaranteed by the government, like an FHA or VA loans. Instead, the loan is backed by private lenders, and its insurance is usually paid by the borrower. Conventional loans offer low rates, flexibility, and is the most common mortgage loan used for buying a home.
An FHA loan is a mortgage issued by an FHA-approved lender and insured by the Federal Housing Administration (FHA). FHA loans require little money down, and a credit score of at least 580 to qualify. FHA loans can have higher interest rates than conventional loans and may not be the best option for those buying a home.
A VA loan is a $0 down mortgage option available to Veterans, Service Members, and select military spouses. VA loans are issued by private lenders, such as a mortgage company or bank, and guaranteed by the U.S. Department of Veterans Affairs. These are not available to everyone and still have credit and borrower requirements.
How To Improve Your Credit Score
If you have too low of a credit score, you may not qualify for a mortgage. If you have a low credit score there are actions you can take to improve it before buying a home.
Experian states that You can improve your credit in a few ways:
Pay Your Bills On Time
Lower and pay off outstanding debt on credit cards
Don’t close unused and open credit cards
Don’t Apply For New Debt
Taking steps to improve your credit score not only will free up finances but offer you more loan options. The higher your credit score the more loan options you will have. For those buying a home, even if you have a good credit score it is worth boosting your score.
Knowing your credit score, and getting pre-approved by a lender will help you set a budget when buying a home.
Know Your Budget
“Many First Time Home Buyers do not calculate their budget for home buying correctly. Many only use their pre-approval price and the purchase price of a property. When buying a home, budgeting for future repairs necessary to get the best deal. Any big repairs, such as a roof or foundation need to be completed before you move in. So make sure you budget correctly for these repairs.” – Loren Howard: Prime Plus Mortgages, Hard Money Lender Arizona
Budgeting is more than your pre-approval letter. When buying a home, make sure to take a thorough inventory of any and all issues you can see. Know features you will want to add or improve over the years.
Having an En Suite may not be a deal-breaker, but adding one may break the bank. Roofs can cost over $10,000 to add, depending on your area. Roofs and foundations can cause major issues in a home if left unattended. Make sure that they are in good condition, or that you can afford to make a larger repair before moving in.
When budgeting for projects, also determine how the project will be completed. While painting a home can be inexpensive, completing a kitchen renovation can be costly and time-consuming. Home inspections should be completed when buying a home. When you budget for buying a home, make sure you include the cost of any and all projects.
Current Lifestyle and Needs
Knowing your budget and credit scores are great first steps when buying a home. When you first begin house hunting you should have a clear break down of what your lifestyle and needs are.
Here are some lifestyle considerations for buying a home. If you have children, make sure the homes you look at have additional bedrooms. Have dogs and animals? Make sure properties you look at have adequate yards. If you love to cook, having a great kitchen may be more important than the size of the bathrooms.
Having more secluded property may be more important than newer updates, but only you and your family will be able to determine your needs. Love a short commute? A suburb may be perfect for your family. Access to schools, grocery stores, or local parks may be more important than other features on a home.
Know what your current lifestyle needs are, and look for features that accommodate those when buying a home.
After accessing your current needs when buying a home, you should also consider your future plans. Having children, or even getting a pet in the near future can change what you want in a home. The house you want today may not suit what you would like in 5 or 10 years.
Depending on your plans you can either try to find a home that accommodates these changes or plan to buy another house in the future. If buying a home in the future makes more sense, make sure that the home you buy now can attract buyers. You can do this by picking a home in a great location, and making upgrades intended for future buyers.
If you would rather not buy again in the future, make sure that when buying a home, it can accommodate these changes. That can mean budgeting for a more expensive home now to fit your future needs. Whether land or square footage, make sure the properties can accommodate the changes and plans you have in mind.
When buying a home, knowing your credit score, budget, lifestyle, and future plans should make it easy to find what you need. These 4 things make it easy to get a clear picture of a home that fits you perfectly.
Credit Scores: Your credit score determines what kind of mortgage and loan options you have for buying a home. Start improving your score to have more options.
Know Your Budget: Aside from looking at homes in your price range, Budget for home repairs you need and want to make to any property that you look at.
Current Lifestyle and Needs: Know what features that you need to have in a home. From kitchens, the number of bedrooms, or even the lot size can all be major factors for the homes you look for and fit your needs.
Future Plans: Are you looking to have children or pets in the future? Make sure your home can accommodate these changes, or be prepared to look for another home in the near future.
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Additional Real Estate Advice from Top Professionals
If a homebuyer needs to obtain a mortgage there are several questions they should ask their mortgage broker. From what type of documents are needed to what will the interest rate be there are countless questions that need to be asked. A home is usually one of the biggest investments a person makes, so they need to understand the mortgage process.
Another big part of the home buying process is having a home inspection done. This is a step that should never be skipped. By having a home inspection buyers will know if they’re buying a money pit.
Finding the perfect home is key, but so is the neighborhood. If a buyer is considering a home with an HOA in place there are some must-know facts about HOA’s. The last thing a buyer needs to do is purchase a home that has rules they won’t be able to follow
Author: Michelle Gibson, REALTOR
Author: Caitlin Cummings
August 22nd 2019
About Caitlin: ...