Tips for buying a house
If you plan to buy a new house this year, here’s how to prepare for and ensure a smooth and successful process.
- Get your finances in order. It’s a good idea to verify you can afford to buy a new home before you start your search. If it’s possible, take a good look at your finances for at least half a year before you plan to start looking for a new home. How much money do you have saved up for a down payment? How much can you afford to spend on a monthly mortgage payment? Ask these questions before getting started to avoid disappointment later on in the game.
- Boost your credit score. You’ll need a minimum credit score of 670 to qualify for a home loan from most lenders, so make sure your score is up to par before you hit the market. Work on paying down debt, paying your bills on time or early and lowering your credit utilization in the months leading up to your search. You’ll also want to avoid opening new cards at this time.
- Understand your mortgage options. Depending on your personal circumstances, you may benefit from a mortgage backed by the Federal Housing Administration (FHA), which only requires a 3.5% down payment, or a VA mortgage, which requires no down payment. Similarly, a 30-year fixed-rate mortgage may be in your best interest, or consider going with a 15-year adjustable-rate mortgage (ARM). Make sure you know your options well so you can make an informed choice.
- Shop around for a mortgage lender. Do your research before choosing a lender. Look for a lender that offers the kind of mortgage you need, and ask for referrals from recent clients. You’ll also want to compare the loan estimates you get from different lenders, looking at the rates, fees, estimated closing costs and anticipated monthly mortgage payment.
- Get your pre-approval before you start your search. This way, you’ll know exactly how much house you can afford, and sellers will regard you as a serious buyer.
- Move quickly when you’ve found a possible yes. The market may be cooling down, but it’s still competitive. If you want to buy a home this year and have your finances worked out before you start shopping, it’s a good idea to make an immediate offer on the home you like.