The process of buying your first investment home can be daunting, especially if you don’t know where to start. Every state has different laws, the market fluctuates from city to city, and you need to know the best way to handle everything from acquiring a mortgage through closing. Below are some of our favorite tips to help make your homebuying application process easier explained step by step.
Understand what you can afford.
The first step in any homebuyer’s process is the budgeting process. Before the listing agent can put you on a property, you need to know how you can afford it. Use free tools online and save yourself time and money by looking at what your monthly mortgage payments and the principal loan could be. When looking for a home, figure out how much you can spend on the house every month including utilities and maintenance expenses. This way you can accurately calculate how much house you can afford for your budget as well as how much house you can buy.
How to get a mortgage pre-approval letter.
Most people do not qualify for a mortgage pre-approval letter unless they have excellent credit and don’t have too many other financial obligations in the process of buying their first home. The best way to get a mortgage pre-approval is to call your local lender and ask about the next steps to get a pre-approval letter.
Prep your budget.
Budgeting is a must part of buying a home. Make sure you keep track of all the expenses you have in the process, including repairs you have to make, utility bills that need to be paid, and even things that go straight into your checking account such as a down payment to get the house. While it’s not always possible, most banks will let your pay some kind of an introductory rate on your mortgage, which means you don’t need much money upfront in order to get started toward paying off your house.
Find a Real Estate agent.
After you have a budget and understood how much you can afford for a house, it’s time to start looking for a house that fits your needs. In order to find the best property, you will need to find an agent. Finding the best agent will be easier than expected, as most real estate agents are just as willing to help in one of the most important financial decisions of your life. The best way to do this is by asking around, or going online and searching for referrals.
Review your credit.
A credit score is a sum of how you pay your bills on time and how well you pay them. Many people don’t realize that the credit score is an important part of the home-buying process, so it’s a good idea to check yours while trying to get approved for a mortgage.
Consider loan options.
Different types of mortgages offer different rates and benefits, so it’s best to know what you can afford and figure out the mortgage that can help you as much as possible along the way to homeownership. Many people worry about paying off a 30-year mortgage, but breaking it up into smaller chunks is one of the best ways to save money in the long run.
These tools will not make your homebuying application process less stressful but they will definitely help you along your way. If you take the time to use these tools, you will be much better prepared for the home-buying process and learn a lot about mortgages as well.