Are You Ready to Buy?
With summer to follow, many home buyers view Spring as the best time to put an offer in on a house. It avoids the decision of whether to change schools during the semester or to transport to and from the old school. Also, with tax season in high gear, it is a good time to organize finances and prepare to apply for a mortgage loan.
Is Your Credit in Order?
Qualifying for a mortgage depends in large part upon your credit. So, know where you stand at least three months before buying. To access your scores, request free reports from Annual Credit Report Request Service, or pay for them when you buy your reports from the credit bureaus:
Equifax – www.equifax.com / 800-685-1111
Experian – www.experian.com / 888-397-3742
TransUnion – www.transunion.com / 800-916-8800
How Much Will You Need in the Bank?
Before making any offers, understand and plan for what you will need in the bank for a down payment, at least 20% to avoid private mortgage insurance (PMI), closing costs, and a few months of mortgage payments, and don’t forget the extras, moving expenses, furniture and repairs.
How Much House Can You Afford?
Can you actually afford the house? List your total monthly expenses and subtract it from your monthly net income. Monthly expenses should include the payment of the mortgage principal, interest, taxes and insurance, as well as utilities. Total housing expenses should be no more than 30% of net income. If you have crunched all the numbers and find you can comfortably make a larger down payment or a family member can contribute via a gift letter, do it and find that your monthly mortgage can be reduced significantly, depending on the amount paid down.
Protect Your Credit
Beyond knowing that timely payment of your debts is good for your credit and not doing so is bad, credit score calculations are complicated. Lenders prefer that you have three or more lines of credit that have been open for a year, credit cards, student loans, car loans and the like. It is an opportunity to demonstrate that you faithfully honor your obligations, but it is a little counterintuitive that closing those lines of credit can damage your credit score.
Ask the Advice of a Real Estate Professional
I can take you through the home buying process and get you ready. But more than that, I will negotiate the best deal and navigate the way through financing, inspections, contingencies and closing. The best investment in purchasing a new home is in selecting the right professional. I am here to help.
Walt Smith, Broker
Coldwell Banker Residential Brokerage
803 622 5210