Both first-timers and seasoned home-buyers are apprehensive of journeying into the housing market at this time. Experts have expressed concern over the potential effects of the oncoming recession on the housing market but rest assured that your options for home buying are still abundant. Despite the stress you may be facing at this time, there are some steps you can take to get the home of your dreams in 2020.
- Monitor Your Credit Score
Your credit score is one of the most critical elements in determining your ability to purchase a brand-new home. Lenders will be pulling your score and report when deciding to fund your purchase or not, so it will be a direct influence on the types of interest rates offered to you. Check your score as soon as you consider purchasing a home to improve your eligibility for a mortgage loan, and continue to do so as you shop for potential homes.
- Determine a Realistic Budget
There’s no use saving up for a home that you can’t afford. Determine your budget early on to set a goal that you can realistically achieve, according to your spending power both now and in the future. Do some research into the current state of the housing market and input your information into a mortgage calculator to get a sense of where your budget should be.
- Begin Saving for a Down Payment
The typical down payment for a brand-new home is about 20% of the asking price. Your ability to pay this amount sends a strong signal to your lender that you are a reliable borrower, and will directly influence how expensive (or cheap) your monthly payments will be. With this in mind, you must do all that you can to save up the appropriate funds to make this payment.
- Gather the Necessary Documents for Mortgage Applications
Lenders require a substantial amount of personal information to approve you for a home loan. The documentation normally includes pay stubs and even tax documents, along with multiple forms of identification, to name a few. You must begin collecting these documents early on, as home-buyers often face unexpected delays when procuring all this information for applications.
- Seek Pre-Approval
There is no guarantee that lenders will be willing to give you the amount you theoretically qualify for. For this reason, you must seek pre-approval for a mortgage loan. A pre-approval will assist you in solidifying your budget, as it gives a more realistic look at what you will be borrowing in the future. (Pre-approvals are not set in stone, but are still reasonably accurate, as they consider financial factors such as your debt-to-income ratio.)
- Start Looking for a Home
Once you have all these elements in line, you’re ready to head out to town and begin house-hunting. Get a sense of what’s available, the styles and features you especially like, and what neighborhoods you feel most comfortable in. This will also help you to identify what homes fall within your budget, sharpening your finances even more.
- Hire a Mortgage Professional
A mortgage professional will assist you in all these steps and more, ensuring that you qualify for the precise home loan that fits your needs perfectly. Contact an expert today to jumpstart your home-buying experience.