4 Preparation Steps to Homeownership
March 1st, 2017
March 1st, 2017
According to F.C. Tucker Co., home sales in central Indiana saw an almost 12% spike in January 2017. Hendricks and Hamilton counties saw the largest jumps in home sales. If you’re looking to buy a home in 2017, preparation and planning is key to the home-buying process. Therefore, here are 4 steps you should take before you start looking for your dream home.
1. Get your finances in order.
Assess your current income and assets. Analyze your expenses. Create a realistic budget. Get rid of unnecessary expenses, such as dining out, entertainment, or personal goods.
Check your credit reports by requesting free copies from the three credit reporting bureaus: TransUnion, Equifax and Experian. Review your reports thoroughly for any errors. Contact the reporting agency to fix any negative information. Check your credit score. Generally, the higher your score, the lower your monthly payments will be. A credit score below 680 will mean you must pay more fees or make a larger down payment. Credit scores around 700 to 720 will get you a good deal while scores of 750 and above will give you the best rates.
To improve your credit score, reduce your debt by paying off loans and/or credit cards. Your credit reports may also provide suggestions on how to improve your credit.
2. Figure out how much house you can afford.
Consult with a mortgage broker like Grandview Lending in Indianapolis to determine how much you can borrow for a home. Generally, lenders say you can afford a home that’s priced two to three times your gross income. However, you should look at your budget to decide how much you can comfortably spend on your monthly mortgage payment.
But don’t forget, your mortgage payment is only part of the costs of homeownership. You’ll also need to include home owners insurance, property taxes and homeowners association dues in your housing costs.
3. Save for your down payment and closing costs.
Depending on your credit and the type of loan you’re getting, you may need to save somewhere between 3% and 20% of your home’s price for your down payment. Additionally, you’ll also have closing costs you’ll need to pay as well.
Talk to the mortgage experts at Grandview Lending about all financing options available to you. Some loan programs offer low down payments of 3.5% to 5%, while others offer no down payment. Additionally, you may want to investigate down payment assistance programs to see if you may qualify.
4. Get pre-approved for a mortgage.
Mortgage pre-approval means a lender has already guaranteed to provide you with a loan up to a certain amount. To get pre-approved, lenders will review your income, assets and credit history. Following their review, a lender will determine if they’re willing to lend you money. If so, you will receive an official pre-approval letter from the lender with the loan amount you have been approved for. Getting a pre-approval letter is worth the time and effort. Sellers are more likely to accept an offer on a house if they know the deal is going to go through. A pre-approval letter tells the seller you’re a credible buyer when compared to someone without pre-approval.
The mortgage specialists at Grandview Lending can help you get pre-approved for a loan. Let us help you get into the home of your dreams. Contact us today at 317.255.0062.
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