HELPFUL TIPS FOR HOME BUYERS
These Helpful Tips for Home Buyers are just some sound advice whether you are a first time home buyer or have bought real estate before.
With interest rates at all time lows and the housing market showing some signs of recovery, there is a lot of interest by first time home buyers looking to get into the real estate market and buy their first home and those thinking of up sizing or downsizing their living situation.
Please review these Tips for Home Buyers.
Check your credit scores. …….Really important Tip for Home Buyers
Your credit score is incredibly important toward a home purchase. If your credit score is below 660, this usually results in a higher interest rate or denial of credit all together. If your credit score is low, commit to taking steps to correct it, by paying every bill on time, paying down debt and if there are errors on your credit report, then dispute these errors with the particular credit agency. This may take a few months or so, but will be worth the wait in the long run.
Save up for down payment and/or closing costs.
Just because there are loan programs with no money down, (VA) or less than 20% down, does not mean that home buyers should be looking to buy if they have no cash reserves. The days of buying homes with no reserves should be behind us. A 20% down payment is always ideal and usually gets a better interest rate and makes for a more desirable offer.
PMI, private mortgage insurance, understand what this is.
Mortgages with less than 20% down payment, require private mortgage insurance, just another cost item of the loan. A homeowner can ask to have this removed, when the mortgage equals 80% of the homes value. Needless to say this could take many years.
Don’t stretch your financial budget too far…. a really good Tip for Home Buyers.
Speak to a lender early on, to get the price range of your specific qualifications and then know the numbers of all the expenses of the loan, taxes, HOA, Mello Roos (if this applies), etc. For example, if you qualify for a home purchase in the price range of $250,000 to $280,000, run the expense numbers for $280,000 and then analyze the total house expense into your financial budget and adjust your home search accordingly. The Standard guidelines call for keeping housing expenses below 35% of total income. Tips for Home Buyers
Know the cost of owning a home.
There is the mortgage payment consisting of principal & interest. There are property taxes, home insurance costs, HOA if the purchase is a condo or PUD (planned unit development) and Mello Roos (additional tax) if applicable. New homeowners need to be prepared for repairs and maintenance issues, no landlord to call for repairs, when you are a homeowner. Rule of thumb is to budget 1% of the home’s purchase price per year for upkeep. tips for home buyers
Does your loan have prepayment penalty?
Please understand your loan, if it has a prepayment penalty, you may have to pay some hefty charges if you pay it off early. If one refinances the loan down the road for whatever reason, this may trigger the prepayment penalty. The lender should tell you if the specific loan you are seeking has a prepayment penalty.
Get a home inspection.
It is always advised that Home Buyers, get a home inspection. These home inspections cost in the range of $350-$500, depending on the size of the home, it is money well spent to find out not only the faults of the property, but the good items as well. Tips for Home Buyers
Mortgage interest deduction.
For most people, the biggest tax break will come from owning a home by be able to deduct the mortgage interest payments from your income. If you are in the 25% tax bracket, then basically the government is paying 25% of it for you, for example, a $1,000 interest deduction will reduce your tax bill by $250. It is advised for all homeowners to speak with a tax professional for their specific tax situation. Tips for Home Buyers
I do hope you find these Tips for Home Buyers helpful
With all that being said, now is a great time to buy Real Estate.