7 tips to prepare the purchase of a property and choose a mortgage
Preparing for a successful property purchase is the goal of everyone embarking on the adventure of acquiring a home or apartment, but how do you move forward, save money, and close the deal?
Here are the best tips for:
- Tips for preparing to buy a home
- Tips for choosing a mortgage
Tips for preparing to buy a home
1. Start by getting financing
The down payment requirement will depend on the type of mortgage and lender you select. Typically, if you buy a home for the first time with excellent credit, you can get your loan for as little as 3% down. For example, a 3% payment on a $ 500.000 home is $ 15.000. You can use a down payment calculator to set your goal and then set up recurring transfers to get started.
Closing costs are fees and expenses that are paid at the end of the mortgage. This payment usually ranges from 2% to 5% of the total loan amount. You can also ask the seller to bear part of the closing costs to save some expenses, like home inspections.
Also, you need to set aside some cash for possible immediate repairs, upgrades, and furnishings of your new home.
2. Select a home that fits your budget
Set your insurance spending limit before beginning the process to begin preparing to purchase a property. The MIAM property finder can help you set a price range based on your income, qualifications, and where you plan to live.
3. Check and strengthen your credit
The credit score is used to find out if you qualify for a mortgage and if it will affect the interest rate offered by lenders. Here are the instructions to boost your credit score when buying a home:
- Request free copies of your credit reports and discuss any mistakes that could hurt your score.
- Pay all your bills on time and keep your credit card balances as low as possible.
- Keep all your credit cards in good standing, as closing them could increase the amount of available credit you use, which could lower your score.
Tips for choosing the best mortgage
4. Know your mortgage options
There are a wide variety of mortgages available to meet your down payment and eligibility requirements. These are the main categories:
- Conventional mortgages are not guaranteed by the government. Most conventional loans for first-time buyers require only a 3% down payment.
- The Federal Housing Administration insures FHA loans, which allow down payments as low as 3,5%.
- USDA loans are guaranteed by the US Department of Agriculture for rural home buyers. These loans do not usually require a down payment.
- VA loans are guaranteed by the Department of Veterans Affairs to current military service members and veterans, so they typically do not require a down payment.
When it comes to the term of the mortgage, most home buyers choose a 30-year, fixed-rate mortgage, which pays off over thirty years and has an interest rate that stays the same. If you opt for a 15-year loan, the rate will generally be lower than a 30-year mortgage, but the monthly payments are higher.
5. Research home buying assistance programs
Many states and cities provide programs that are often combined with low-interest mortgages with down payment assistance and closing costs.
Tax credits are also available in some of these programs.
6. Compare rates and mortgage rates
You can recommend loan estimates to multiple lenders for the same type of mortgage. The Consumer Financial Protection Bureau recommends comparing costs, including interest rates and possible origination fees.
Lenders may offer the opportunity to purchase discount points, which are fees that the borrower pays in advance to lower the interest rate. Buying points can make sense if you have the money on hand and plan to stay in the house for a long time.
7. Get pre-approved
An offer from a lender to loan you a certain amount under specific terms is known as a mortgage pre-approval.
With this approval letter, sellers and realtors can give you a head start on verifying that you are a serious buyer.
You can request pre-approval when you are ready to start the purchase process. Requesting pre-approval from more than one lender to compare rates shouldn't affect your credit score, as long as you request them within a limited period of time, such as 30 days. Preparing to buy a property has never been so safe!