These days, more than ever, homebuyers are extremely cautious when it comes to purchasing their first house. In this unstable economy, people are waiting longer and longer to buy their first home because it can be considered a risky purchase. Before anyone purchases a home, they must first ensure that their finances are in order and be aware of home buying tactics.
Fix Your Credit
The better your credit, the better deal you will get on your mortgage rate. Before you embark on a quest for a new home, get your credit straightened out so that you will save more in the long run. Pay off credit card debts, make sure all bills are paid on time, and avoid opening any new credit cards at least a year before the big purchase to ensure that you get the best rates possible. Be sure to also check for any inaccuracies on your credit report and contest them right away.
Be careful when shopping around for mortgages, because many banks will pre-qualify you, but by doing so there will be an inquiry on your credit score. Too many of these within a short period of time will lower your credit score, and then you may no longer qualify for the original quote by the time you’ve settled on a lender. However, if you make sure that all of these credit pulls occur within the same month, they will only be considered one hit.
Save for a Bigger Down Payment
While it may be tempting to take advantage of the low down payment percentages offered right now, you are better off in the long run if you instead make a bigger down payment now. The larger your down payment amount, the less risk you pose to mortgage lenders, and therefore the more likely they are to accept you and offer you a lower interest rate.
Factor in Insurance and Taxes
There are a number of things that you will need to pay for in addition to your mortgage and down payment. You’ll need to pay closing costs, which are typically a couple thousand dollars. You will also need to pay property taxes. They are calculated based on a percentage of the value of the property. Before you determine how much house you can afford, make sure to also factor in the cost of property tax.
Homeowners insurance is also a necessity. There are a number of elements that will determine the cost of one’s homeowners insurance. Town of residence, frequency of natural disasters, and dangerous additions such as swimming pools and trampolines will all have some weight on the cost of the insurance premium. Be sure to consider the price of your homeowners insurance when determining what you can afford.
The best way to ensure that you have the lowest cost homeowners insurance is to shop around. Contact TJ Woods Insurance to learn more about our competitive homeowners insurance rates today.
