Tip #1 – Pay Attention to Interest Rates
An increase in interest rate can increase the payment on your mortgage, but it has more impact than that. The more you plan to borrow, the more a change in interest rate will affect your loan, payment, and overall purchasing power. The interest rate can also affect the overall mood of the market. Changes in either direction can cause a sense of urgency in buyers and sellers alike.
Tip #2 – You Need to be Able to Afford More Than Just the Down Payment
At one time, home buyers could get away with just the down payment coming out of pocket. All other associated fees and closing costs were able to be rolled into the mortgage. But these days, lenders want buyers to not only have the down payment amount, but also their closing costs available in cash. And with some closing costs as high as 2.5% of the loan amount, this can really have an impact on how much home you can actually afford.
Tip #3 – Get Pre-Qualified Before You Start Seriously Looking for Homes
Getting pre-qualified for a home loan doesn’t guarantee you will be approved, but it is a good place to start. This is because getting pre-qualified will give you an idea of how much home you can afford. Plus, because your credit score, debt-to-income ratio, and down payment amount can have an impact on your interest rate, getting pre-qualified will give you the information you need early on in the process so you can improve your chances of getting your loan approved at the best rate possible.
Tip #4 – Do Your Due Diligence When Choosing an Agent and/or Lender
Buying a home requires a lot of research. But, your research shouldn’t be restricted to just comparing locations and properties. You also need to do your due diligence when shopping for a real estate agent as well as your lender.
When you’re buying your first home, trust in your agent and lender is paramount. So, ask those you trust for referrals to Realtors and lenders. Visit with each one and speak to them before you agree to use their services.
Tip #5 – Be Ready to Move
If you find a home you love, put in an offer and get ready to move because odds are things will progress quickly. This is especially important if you’re looking at homes priced $200,000 or less. Buyers will be jumping on these properties because with home prices rising, they’re going to want to get in early, and so should you. Good luck!
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