Buying a home for many people is the biggest financial decision that they will make in their lives. As long as there’s potentially two or three hundred thousand dollars put in to purchasing a home knowing how to do it the right way will be one of the smartest things that someone can do for themselves.
The formula for buying a home has more or less stayed the same over the years and that’s a good thing because this means there’s essentially a blueprint for how to handle a home purchase that’s been tried successfully many times while deviating from this path may end up with an initial purchase of the home but may result in the person having to sell house as is if they go about it in the wrong way. Following these rules can and often are the difference between the dream home you’ve always wanted or a life of renting in perpetuity.
The first thing about buying a home that’s the most important thing to know is that it’ll be impossible to accomplish with a solid savings if you don’t have one then you need to start acquiring one and it will take time nothing about it is easy. You need to start saving so that when you do find that dream home that you’ve always desired you’re actually able to make a move on it and purchase it. Both lenders and the sellers will be put at ease if you can show that you have enough money saved up. You need to start saving before you see any home you have to have. If you wait until you find the home of your dreams until you start saving the house will remain just that, a dream.
Understand what it takes to have a 20 percent down payment for whatever your dream home is valued at. Some homes can be bought with as low as a three percent down payment but that’s not how every home is 20 percent of a down payment is something that needs to be worked towards in case you find yourself in that situation.
Your credit will be checked when it comes to purchasing a home so it’s a good idea to know beforehand where you stand credit wise this saves a lot of pain of rejection in the future when you already know or have a good feeling about what you can and can’t purchase. The stronger your credit score raised the likelihood of you being able to actually get a home loan. If your score is too low you may have the exact opposite issue where no banks will lend enough to purchase the property. It’s necessary to pay down your debt as well.
Figure out how much you can pay for your mortgage, you’re looking for a number that’s about 15 to 30 percent of your monthly income. The goal here is that you’re paying an amount that doesn’t keep you up at night so that you can actually enjoy your home purchase and if you were saving like was spoken about before that ends up with you saving a lot of money in interest fees.
Another component of buying a home is the amount of interest that you’ll need to pay towards the loan that you’ve taken out. Interest simply put is the money that you owe your lender as a fee for them letting you borrow the money in the first place. Interest in laymen’s terms is how the bank makes money off of lending you money. The interest rate offered by the lender usually depends on many factors such as credit and how much money you have for a downpayment. You’re going to want to shop around and find the lowest interest rate that you can find if not you may end up in a situation during a financial crash where you have to sell house as is instead of being able to maintain it.
There is actually many different types of home loan options that you need to consider when you’re trying to decide whether or not you should purchase a home. The two main option however, are the fixed rate mortgage and the adjustable rate mortgage. Fixed rate mortgages are loans that have interest rates that don’t change at all for the entire period the home loan is in effect. There’s positives and negatives when it comes to fixed rates. If interest rates fall low the home owner is still responsible for paying that interest rate. Alternatively if the rates skyrocket the bank can raise the interest rate on the homeowner. The other type of mortgage is the variable rate mortgage and these interest rates are heavily ties with the economic situation in the United States and are usually based on the U.S. Treasury bonds. These interest rates can typically start off small before ballooning after a five to seven year period which was part of the issue during the great recession many people had to sell house as is in that context.
For more information on selling a house as is