Knowing When You’re Ready to Buy a Home

Posted by Jenni Barnett on Monday, May 28th, 2018 at 8:04am.

When preparing to buy a home, it’s important for buyers to work with a real estate professional who can advise the best possible strategies for getting a mortgage and finding an affordable home. This partnership can make the real estate sales process go a lot more smoothly.

Perhaps the most important part of getting into the housing market – especially if it’s for the first time – is to do as much homework as possible before diving in, according to Bankrate. That means first determining what homes in a given area are selling for, and what that would mean to the would-be buyer in terms of monthly costs, incorporating charges like mortgage payments, mortgage insurance, homeowners insurance, property taxes and so on. Closing costs must also be considered at this time.

Once that number has been determined, the real estate sales process becomes a lot easier to navigate.


A strong financial profile
Buyers not only need to have potentially up to tens of thousands of dollars in savings to make a sizable down payment in the first place, but they also need to be able to afford housing costs on an ongoing basis and – perhaps most important to the mortgage process and long-term affordability – carry a strong credit score. A good rating can not only unlock mortgage availability in the first place but also bring down mortgage rates.

Likewise, larger down payments necessarily reduce the principal of the loan, meaning that when buyers combine high down payments (preferably in excess of 20 percent) with good credit, they may position themselves to save tens of thousands of dollars over the lives of their loans.


What to keep in mind
When trying to determine how much home they can afford, consumers should try to remember a few basic rules of thumb about housing costs, according to The Balance. Generally speaking, experts advise that a mortgage payment should not cost more than one-quarter of a would-be buyer’s monthly income. While there may be a little bit of wiggle room here, this is a good anchor point at which to set expectations for affordability.

Of course, some homeowners may have their sights set on properties that are more expensive than they can currently afford, especially with the way prices are rising in today’s market. Which simply means is they will simply have to put in more work to improve their credit score (to get a better rate) or put more into savings (to increase the size of a down payment). However, some expectations may simply be untenable in terms of affordability, and would-be buyers might simply have to become a little more realistic with their approach.

Working with an experienced real estate professional will help buyers truly understand what they should be looking for in the market and how they can best approach their home buying efforts.


Brought to you by HMS Home Warranty.  HMS is an industry leader with over 30 years of creating success for clients and providing peace of mind for customers.  To learn more click www.hmsnational.com

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