Buying a house is no easy task. You shouldn’t only be financially stable enough to pay for the home purchase itself, but all the other costs that come with being a homeowner. Not only that – if you need help in financing your home, then you need to find a good mortgage lender and shop for mortgage rates that will work best in your favor.
With enough knowledge and preparation, you can lessen your stress, find a house that’s ideal for your family and lifestyle, and close a good deal without any hassles.
To help you prepare yourself with the home purchase, here are eight must-dos to keep in mind before shopping for your future home.
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Start Saving At Least 20% Down Payment
Cash reserves are essential when buying a house. Even if there are mortgage loans that allow you to put down less than 20% down payment, it is best to save more and pay at least 20% for you to enjoy no mortgage insurance fees and lighter monthly mortgages.
Work On Improving Your FICO Score
Your credit score needs to be good enough for you to qualify for a mortgage. There is a minimum credit score requirement for every type of mortgage. For example, most lenders will ask for at least 620 credit score when you apply for Conventional Loans Laredo. For FHA loans, the usual FICO score requirement is at 580.
Add Another Source Of Income
If your income is only enough for your current monthly expenses, it’s best to find other sources of income to accommodate your monthly mortgage. This way, you can show your lender that you’re capable of paying the loan comfortably.
Avoid Big Purchases
Your lender will check your bank statements once you apply for a mortgage. By avoiding expensive purchases especially ones made with another loan, you can avoid increasing your DTI ratio and credit utilization ratio.
Good Read: What Is a Good Credit Utilization Ratio?
Refrain From Changing Jobs
Financial stability is important when applying for a mortgage loan. If you change jobs before or during application, this can be a red flag for lenders. Job hopping may mean you won’t have a stable income which can affect your ability to pay them back.
Find A Real Estate Agent
If you think hiring a real estate agent is just another added expense, you’re wrong. First, it is the seller who pays the real estate. Second, you can easily find homes who matches your price range by working with one. This makes house-hunting a lot easier on your part.
Recommended Read: 9 Red Flags to Watch for When Picking a Real Estate Agent
Shop For Mortgage Lenders
Don’t stick to the first lender you find as not all lenders are the same. It is your right as a home buyer to shop for mortgage lenders and evaluate how much you can afford. Compare their rates, terms, and conditions before choosing a mortgage lender.
Get A Preapproval Letter
Some homebuyers think having a prequalification letter is enough. However, such a letter is only based on the information you provided your lender. What you need is a pre-approval letter before you go shopping for houses. This way, you’ll have an idea on the price range of homes you can afford to buy.