Purchasing a new house involves considering multiple factors before you make your final decision. If you are planning to buy a new home, it is recommended to follow these 4 steps, provided by Rex Homes and mentioned below, to smooth your purchase process.
- Check your credit score
One of the first step is to check your credit score before you start looking at potential properties. It is suggested to do this at least one year before you plan to buy. This way you have enough time to improve your score or fix any errors. Traditional mortgages require a minimum score of 650 or higher. If all your financials are correct and in order, you can qualify for a low-interest rate mortgage with a credit score of 740 or higher.
- Determine what you can afford
Your debt-to-income ratio is critical in determining if and how much mortgage will be approved by your bank. It is suggested that your total monthly house payment including principal, taxes, insurance, and interests should not exceed 28% of your gross monthly income. Banks also check for any other debts you may be carrying such as student loans, car payments, and credit card payments. It is recommended to keep this amount below 36% of your gross monthly income for a favorable mortgage interest rate.
- Get pre-approved for a mortgage
You can organize your financial documents and convince the seller that you are serious about your house purchase by getting pre-approved for a mortgage. The pre-approval offers a conditional commitment that a specific sum will be provided to the buyer based on the information available. It should be noted however that pre-approval does not guarantee mortgage.
- Scan all potential neighborhoods
It is important to remain informed about the area where you intend to live, what are the available housing options, what is the price of houses in the area and so on. You can scout the area where you are considering buying a house by visiting it during day times as well as at night. You can also test to see how long is the commute to your workplace, check out the surrounding shops, schools, recreational areas, and speak to residents already living in the area if possible. This will give you a fair idea of what the neighborhood is going to be like if you decide to purchase the house. Scanning potential neighborhoods may seem like a huge task but it can benefit you in making an informed purchase decision.
How can a good mortgage professional help you?
If you are planning to purchase a new home it is always recommended to contact a mortgage professional to obtain advice on steps you can follow to ensure a smooth purchase procedure. A knowledgeable mortgage professional will help evaluate your finances and find the best mortgage deals based on your individual financial situations. An experienced professional will also provide the correct insights and guidance on how to maintain your credit score so that you can purchase the home of your dreams.