If you’re planning on buying a home in the next few months now is the time to start preparing. The more prepared you are, the easier the process of purchasing a home will be. Also, when it comes to buying a home, information is the best tool you can have. The home buying process can feel overwhelming, but working with a trusted real estate agent can make the process much more straightforward. If you’re thinking of buying a home here are the most requently asked questions about home buying and the answers to get you started on the path to home ownership:
How Much House Can I Afford?
This is one of the first things that people start thinking about when they want to start looking for a home. To figure out how much house you can afford to buy you first need to have a good handle on what your expenses are and what your actual income is. That includes all your debts and monthly payments like your car payment, personal loans, and credit card bills. Generally, mortgage companies won’t factor in your recurring monthly expenses like your cell phone or cable bill but, it’s a good idea to sit down with all of your monthly bills and come up with a complete list of expenses. How much house you can afford will also depend on factors like whether or not you will be paying HOA fees and the cost of mortgage and home insurance. The best way to figure out how much house you can comfortably afford is to use a home loan cost calculator that will be able to give you specifics about your situation.
Do I Need A Down Payment?
Unless you are planning on getting a home with a VA home loan, you will need to have a down payment. In the past, the minimum recommended down payment was 20% of the purchase price of the home. However, these days the recommended down payment is closer to 10% of the home’s purchase price.The more of a down payment you put down on the house, the less you will pay in the long term for the home. Coming up with a large down payment is difficult for many homeowners though so many homeowners look for mortgages that don’t require a high down payment. If you are using a VA home loan because you served in the military or because a family member did you can get approved for a home loan without having to put down a down payment since the VA guarantees the mortgage. If you are having trouble coming up with a down payment you can see if you qualify for an FHA home loan. An FHA home loan requires as little as a 3.5% down payment for some buyers.
Is There A Minimum Credit Score To Get A Mortgage?
Good credit is essential when it comes to buying a home, but that doesn’t mean that you can’t buy a house if you have had credit challenges. Each lender has requirements for buyers, and some require a higher credit score than others. But in general, you should have a credit score of at least 620 to have the best chances of getting a home loan.
If you have bad credit or no credit but you have steady employment or income, and you want to buy a home you can try for an FHA home loan because the FHA home loan doesn’t have a minimum credit score. Applicants who have a 580 credit score or higher qualify for a lower down payment, but you can apply for an FHA home loan with any credit score.
One of the best things to do when you decide that you want to start looking for a home is increase your credit as much as possible. Pay off outstanding debts. Make sure that you are making all of your payments on time. If you have no credit, you should talk to a financial professional to determine the best way to build your credit score. If you start working on your credit when you first start the home buying process when the time comes to make an offer you’ll have the best possible credit to help you get a good deal on a home loan.
How Long Does It Take To Buy A House?
The amount of time that it takes to find and close on a house varies from person to person. It could take months to find the right home, or you could find it right away. However, in general, the closing process takes about sixty days. If you’re already approved for a mortgage, the process moves a lot more quickly. That’s why one of the first things that you should do when you want to start looking for a home is to fix your credit and get your finances in order.
What Are Closing Costs?
Closing costs are the various fees and expenses for things that are tied directly to the sale of the house. These costs are usually not included in a mortgage and are costs that you will pay out of pocket unless you can negotiate a deal to have the seller pay for these costs. Closing costs include things like the home inspection and the lawyer’s time to prepare the sale documents. The closing costs for a home vary, but as a general rule, you can expect to pay between 2% and 5% of the purchase price of the house in closing costs.
Some lenders will allow you fold closing costs into the cost of the mortgage, but you will need to pay a higher interest rate on the mortgage if closing costs are included. Depending on the interest rate adding closing costs to the mortgage could lead to paying more over the course of the mortgage. It’s best if you can pay the closing costs out of pocket or borrow money for the closing costs from a family member or friend.
