Home buying follows a process. It’s like a video game where you need to accomplish missions to progress to the next level. There are also specific requirements that you need to fulfill before proceeding. In this article, we’ll discuss the four things you should know when buying a home. Reach Home Loans’ Brandon Brotsky shares four questions that you need to answer before purchasing a home. Let’s get to it.
Your credit situation affects your qualification to get a mortgage. Going to a credit reporting agency can provide you a credit report that’ll show your credit standing and credit score. However, Brandon explains that going to credit bureaus is always not the best case.
“Even if you were to go on to the individual bureau sites like Equifax, Experian, and TransUnion, those scores never seem to match up with the scores that are actually pulled when you’re applying for a mortgage. So if you’re truly in the market to purchase a property, it’s a very good idea to reach out to a lender directly.”
Brandon recommends visiting a lender and letting them pull your credit. In this way, lenders can tell you if there’s anything you need to work on to improve your credit score. At Reach Home Loans,
“We’ll run a credit simulator that will tell us exactly what needs to be done to improve the scores to the point of qualifying, and it’s not a guessing game. You do not have to go to some credit repair company, and the scores don’t end up getting where they were expected to be….We’re just giving good information to help you out. You can go ahead and improve your scores.
In every mortgage contract, a down payment is always required except only if no down payment is required. However, most mortgages require down payment except for VA mortgages that are 100 percent financing.
“You’re going to need some down payment. If you’re a first-time home buyer—someone who’s not owned real estate within the last three years—you can put as little as 3% down using a conventional mortgage or 3.5% percent down going FHA.
More so, you want to make sure that you’ve at least saved up enough money to cover the down payment….So as an example, if you’re a first-time home buyer looking at something for $300,000, you need a minimum of $9,000 to qualify for the down payment.”
Moreover, Brandon emphasizes that having extra money is not just for the down payment. Buying a home means that you’ll incur closing costs as well.
“So these are costs that come from whichever lender you’re working with. It’s going to be title costs or government charges. In this case, you want to make sure that you can consider these things when buying. In fact, Some realtors will tell you, ‘please consider 3% or 2.5% of your purchase price as your money for closing costs.”
Basically, you need to assess if you’re staying for the long-term, short-term, or for life. Knowing this can help you decide the best financing option for this home. Brandon says this because interest rates will affect your payments based on the term you plan to stay.
“If you’re buying a property and keeping it long term like more than five years or longer, the rate is going to be more critical. You’re going to save money over the term of the mortgage. If you can save money on costs upfront, that’s better short term.
Aside from the home’s purchase price, there are still a lot of expenses that come after the purchases. That’s why Brandon advises everyone to be prepared for these expenses as well.
“You’re paying property taxes and homeowners insurance. If you’re putting a down payment of less than 20% down payment on the property that’s not a VA mortgage, you’re going to have monthly mortgage insurance or also known as PMI. You’ll also have a homeowner’s association fee and utilities like water, electricity, and so forth.”
Brandon further explains that first-time home buyers need to sit down and think hard before buying a home. He recommends laying out all the expenses and assessing if the potential buyer is comfortable with it. In summary, Brandon wants every first-time buyer to consider all the costs before proceeding with the purchase.
Have you decided to buy a home? Get prequalified now at Reach Home Loans, you’ll find several home loan products that can match your ability to pay. We can also help you make the right financial decision with the help of our home loan experts. Call us now at 954-703-1465, and let’s get you started.
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