Ordering finances when looking to buy a house

 

  1. Strengthens your credit reputation. The higher your FICO credit score (ranging from 300 to 850), the better the interest rate you get. This is extremely important. The difference between a mortgage with an interest of 4.5% and a mortgage with an interest of 5% can mean tens of thousands of dollars over the life of the loan.
  • Get a free copy of your credit report so you can see what lenders look at your credit history. Pay your credit cards and resolve any dispute regarding credits or blackberries.
  1. Get pre – approved credit for actual amount you can pay. Apply a credit to several lenders within a period of two weeks for investigations not damage your credit report. Do it before you contact a real estate agent so that you have a solid idea of what you can afford and do not accidentally fall in love with a home that is beyond your reach.
  • Vendors love buyers who receive pre – approved credit. They almost always have the green light from lenders, which means there is less risk of ruining the deal at the last minute.
  • There is a difference. Pre – approval means that the lender is willing to give you a loan after seeing your financial situation. Prequalification only means that the lender has calculated the amount you can borrow. This does not mean you’ll get the loan.
  1. Search your mortgage. You may think, “why would you look for a mortgage before deciding on a house should not it be the other way around?” Well, not necessarily. Find a mortgage before deciding on a home can be beneficial for one primary reason:
  • You will know exactly how much you can borrow before buying the house. Too many people fall in love with a home that is beyond their means. They are struggling to find a mortgage to cover the cost of the house. Find the first mortgage and the home then it will definitely be less attractive, but much more intelligent. You’ll know immediately if a house is in your price range or outside of it.
  • Think about the type of down payment you can give. You must include in your mortgage calculations, but need not know for sure when looking for a mortgage. Have a rough idea. You will learn more about this in another section of the article.
  • Find out what rates lenders use to determine if you qualify for a loan. “28 and 36” is a common ratio. This means that 28% of your gross income (before taxes) to cover expenses to your home (including principal and interest mortgage and real estate taxes and insurance). The, combined with your housing costs, monthly payments on your outstanding debts should not exceed 36% of your gross income. Calculate each percent of your monthly gross income (28% and 36% of US $ 3750 = US $ 1050 and US $ 1350 respectively). Your monthly payments of outstanding debts cannot exceed the difference between the two (US $ 300) or, otherwise, you will not approve.
  1. If you qualify, check out the programs for first -time buyers. They often have less stringent requirements payment. The offer several states and local governments. You may also be able to access up to US $ 10,000 from your 401 (k) or Roth IRA without penalty. Ask your real estate agent or query in the human resources department of your workplace for specific information regarding loans, compared to those assets.
  2. Consultation and hire a lawyer (optional). If you expect buying the house a simple and straightforward matter, then you probably only need a realtor, a company escrow and, perhaps, a mortgage broker. But, since when things turn out as expected? It is best to hire a cheap honest, respectable and fees (relatively) attorney if:
  • The cost of attorney is a drop in the bucket compared with the total amount you’ll probably spend at home.
  • The house we’re buying is in foreclosure or in a succession process, which means that the house will distribute as part of the estate of a deceased person.
  • Suspicions that the seller might try to pull back with respect to treatment or do not trust him.
  • Your state requires an attorney during closing. Currently, six states require the presence of a lawyer. Check with your state real estate commission to find out if this is a common practice in your state.