The time has finally come to finally leave those cramped apartments and older rental houses in favor of a place you can make your own. Are you excited? Buying a house should be a thrilling, joyous time in your life. But, if you’re not suitably prepared, it can end up being an overwhelming process. Don’t let the buying process suck the happiness from this time. Start with these tips for first time home buyers so you can prepare and make the process as seamless as possible.
It can be a lot of fun to trawl through the listings of homes for sale in your area, or to wander through open houses on the weekends and think about your future home. But, before you start earnestly looking, it’s important to have a thorough understanding of your financial situation. You’ll need to know what your buying budget is before you fall in love with a home that’s well over what you can afford. At the same time, getting your finances together can actually help you save money in the long run!
Credit Score and Debt
Two key components of your financial situation that any lending organization will look at are your credit score and your debt-to-income ratio. Lending institutions want to know that they’ll recoup the money they lend you, and they use your credit score, income, and debt to help determine how likely they are to get their money back. If you have a higher credit score and smaller amount of debt in comparison to your income, you’ll be a more appealing candidate to lenders. Generally, the more appealing you are to lenders, the better interest rate you’ll receive. And, since most mortgages are set to go for a couple of decades, even a point or two of difference in interest rates can result in some big savings or spending over the course of the loan.
Most lenders will be happy to run the numbers with you to give you an idea of where you stand financially. Running the numbers can help you learn whether it’s worthwhile to buy now or to give yourself some time to save further or otherwise adjust your financial situation. For example, bringing your credit score up ten points can push you into a better bracket score-wise, which can mean a big difference in interest rate. If that’s the case, it can be worth taking three or six months to pay down some debt and boost your credit score.
The other key element of home buying finances is, you guessed it, your down payment. The more you can put down, the lower your monthly mortgage payments are likely to be. However, there is a diminishing rate of return on saving up a larger down payment versus owning sooner. Talk to your lender about the pros and cons based on what you have saved up and all those other financial factors. Of course, keep in mind that if you have too small of a down payment, you may be required to pay for mortgage insurance, which will add to your monthly payments.
Know Your Home Options
One of the other key questions you’ll need to figure out before looking at all the homes for sale in your area is whether you’d rather buy an existing home or go the route of a new build. While existing homes may be available more quickly, they’re also likely to come with additional quirks or repair needs from the previous owners. New construction homes might take longer, but also offer you the option to customize as you choose.
If you’re looking for new homes for sale in the Hamilton area, start with the experienced pros. Contact CarrHomes to see our available homes or start planning your own!