Factors to Consider
There are many factors to consider when purchasing a home.
Purchasing a home is an important decision and one that should not be made lightly. Often the purchase of a home is the most expensive purchase an individual will make in their lifetime. When purchasing a home there are many factors to consider before making the leap to homeownership. Is the home located in a good school district? Is the home large enough for your growing family? Is there a community pool for those hot summer afternoons? Your MillerJones agent will take the time to learn about your wants/needs and work together to find your perfect home. Below are several factors to consider as you begin the homebuying process:
Start saving for a down payment
One of the greatest challenges many buyers encounter is how to come up with the down payment. Most conventional mortgages require a buyer to put down as much as 20% of the purchase price. There are other financing options that may allow a buyer to place less down; sometimes as little as 3% - 5%. For example, a 5% down payment on a $200,000 home is $10,000. Check with your lender to determine what option is right for you.
Explore your down payment and mortgage options
There are multiple mortgage options to consider, each with its own combination of pros and cons. Conventional Mortgages typically require a borrower to pay a higher down payment; however the cost to borrow the funds (closing costs) may be less. FHA loans are insured by the Federal Housing Administration and only require a borrower to put down 3.5%. VA loans are another option. VA loans are guaranteed by the Department of Veterans Affairs and sometimes require no down payment at all! Please keep in mind that paying a higher down payment will reduce your mortgage; whereas making a lower down payment will cause your monthly mortgage payment to be a bit higher.
Research state and local assistance programs
While many borrowers obtain loans that are backed by federal programs, many counties offer assistance programs for first-time buyers with perks such as down payment assistance, closing cost assistance, tax credits and discounted interest rates. Talk with your lender to determine what financing option may be right for you.
Determine how much you can afford
There are many factors that a lender considers when approving a buyer for a loan. How much does the borrower earn? Does the borrower have good credit? Does the borrower have adequate funds for the down payment, closing costs and reserve funds? Before starting the “home-shopping” process, it’s important to talk with a lender about down payment requirements, mortgage options and qualifying factors.
Check your credit and avoid new activity
When applying for a mortgage, your credit will be one of the key factors a lender will use to determine if you qualify for a loan. Additionally, a borrowers credit (good or bad) will help determine the interest rate and possible loan terms. When applying for a mortgage, a borrower should resist opening any new loans or having credit pulled. Opening new accounts like a credit card or auto loan is a bad idea and may negatively impact a borrowers purchasing power.
Compare mortgage rates
There are many factors to consider when choosing the mortgage option that is right for you. Some mortgages may have an adjustable rate; (Adjustable Rate Mortgage) which often have a lower initial rate which results in a lower monthly payment. Other mortgage options offer a fixed rate which is often preferred by a borrower who intends to remain in the property for a lengthy period of time. Speaking with multiple lenders is encouraged and will allow exposure to multiple financing options.
Get pre-approved
A lender can look at your current financial situation and credit to determine whether you qualify for a loan. Once this has been determined, a lender will write a letter of Pre-Approval which can be used to prove your credit worthiness. It’s important to attach the Pre-Approval letter to an initial offer. A buyer who has a Pre-Approval letter in hand looks like a much more serious buyer compared to a buyer who has not been pre-approved.
Free Market Analysis
Whether you’re interested in buying or selling, having a real estate professional on your side can make all the difference. Your MillerJones agent understands the Tampa Bay market, how to effectively market and negotiate to get the best deal possible. Please call or email today.
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