Stop and think for a moment about how nice it would be to be able to just walk up to a builder and hand over a stack of cash or a check to buy a home. Sounds pretty magical, right? Sadly, as much as some of us might wish, there are a great many more steps involved to purchasing a home. For those of you who have never been through the process before, buying a home can be a daunting process. Here at Coldwell Banker Distinctive Properties, we have years of experience helping locals in Craig find the perfect home. If you’ve never been through the home buying process before, we’re happy to guide you every step of the way and educate you as we go. To get you started, here are a few things to know before you dive into the lists of homes for sale.
It might sound obvious, but it still warrants being said: your homebuying process will go much more smoothly when you know what you have to spend and what your home budget is. Unless you’re incredibly lucky and just won the lottery, odds are slim that you’ll be paying cash for the entire cost of the house. In order to figure out what your home budget is, we definitely suggest talking to a lender or playing around with a home affordability calculator. Talking to a lender will give you a good idea how much of a loan the bank will approve, what your interest rate is likely to be, and what your monthly payments will be.
Of course, the two biggest factors that affect your potential mortgage rate are your credit score and your down payment. It doesn’t hurt to poke around through the local listings of homes for sale to get an idea what a home near you will cost, and how much the cost will vary based on the size you want. Then, as soon as possible, you’ll want to start saving up a down payment. While it used to be required that one had to put a full 20 percent down, that’s not necessarily the case any longer. However, less than a 20 percent down payment may result in mortgage insurance on top of your monthly mortgage payments. So, the first step toward buying a house is knowing what you can afford and saving up the appropriate down payment.
The other big factor that will affect your mortgage is your credit score. Since you’ll likely want to take the time to save up more of a down payment, it’s also wise to take that extra time and improve your credit score as much as possible. This can mean consolidating loans, paying off credit cards or a car loan, and so on. Generally speaking, the higher your credit score, the lower your interest rate, which will reduce the overall price you’ll pay during the lifetime of the loan. It will be worth it in the long run to do as much as you can to improve your credit score.
Along with that, as you save up your down payment, avoid making any other big purchases, if possible. When you go in to actually apply for the loan, they will pull your credit score, and if you purchased a new car the week before, your credit score may have dropped. Yes, in that short of a time span. Whatever numbers are quoted by the bank are not set in stone until the paperwork is signed and the loan is issued during the home’s sale, which means you’ll want to wait on any big purchases until after closing on the home. At any point up to that, your credit score may be pulled again and if it changes, so does your mortgage.
There are an abundance of local, regional, state, and national options to help defray the costs of buying a home. In particular, there are a good chunk of specialty loans and grants out there designed to help first time home buyers. You’ll want to work with a local realtor and your bank to trawl through as many options as possible. After all, you never know what you’ll be eligible for, and every little bit helps when it comes to buying a house.
What many first time homebuyers don’t realize is that there are additional costs on top of the down payment and your monthly mortgage payment. This is the stage that most often trips up first time buyers, but your realtor will be able to guide you through the process. Generally, the closing costs include homeowners insurance, a home inspection, title searches, and the commission to pay your real estate agent. It is fairly common to ask the seller to pay a portion of the closing costs, especially for first-time buyers, so discuss including that request when putting an offer on a home.
The other aspect many first time buyers don’t consider is which property types will and won’t work for your needs. Are you dead-set on a single family home, or would a townhouse work for you? Think about square footage, number of bedrooms, yard space, and so on. You’ll also want to consider other fees that might occur, like monthly or annual homeowners association fees. Of course, it’s important to think long-term, not just about immediate needs. If you’re thinking of starting a family, think about budgeting for a home that will accommodate a growing family. And also consider resale value. Your real estate broker can guide you through these considerations and give you an idea what local housing market trends have been and are projected to be, so you can better plan. Knowing this will help narrow the list of houses for sale and make it easier to find the right home for your needs.
Buying a house doesn’t have to be a harrowing process. If you’re ready to buy a home in Craig, let the experienced local team at Coldwell Banker Distinctive Properties help you throughout the process. Contact us today to get started!