Buying a House 101

Knowing just a few key facts in advance can make the homebuying process go much more smoothly. Here are ten things every prospective homebuyer needs to know.

1. Only buy if you’re sticking around. Taking out home loans involves a lot of up-front transaction costs that probably aren’t worth it unless you can stay put in your home for at least five years or so. You might hold off on buying until you know you can put down roots.
2. Shore up that credit. Your ability to get affordable home loans will depend directly on your credit score. Before you start house hunting, order the free annual credit reports to which you are entitled. Check over the information for accuracy and fix any errors you find by writing the credit bureau.
3. Don’t buy beyond your means. The rule of thumb to remember is that you can buy a house that costs up to two-and-a-half times your annual income. This is just a guideline, though. You might also consult an online calculator to figure out how your debt obligations and other expenses might affect your home loan.
4. Don’t stress if your down payment is less than 20%. Many of our lending partners welcome homebuyers who have less than a 20% down payment. In fact, you can get home loans these days with as little as a 3% down payment in some cases.
5. Find a home in a good school district. Even for homebuyers without children, buying a home in a quality school district is important because it ups the value of your home. You will be able to sell your home for much more if you live in an area with good schools.
6. Seek out a professional. Trying to navigate the world of home loans and home buying can be difficult on your own. Try to find a buyer agent that can help you through the process and advise your bidding strategies.
7. Be careful with points and rate. When you choose home loans, you will usually have the option of buying additional points, or a part of the interest you pay at closing, in order to get a lower interest rate. For home buyers who intend to stay in their home for at least five to seven years, the points are almost always a good deal.
8. Pre-approval is the way to go. Getting pre-approved on home loans will save you from wasting your time looking at homes you can’t afford, and it makes sellers take your offer more seriously when it comes time to bid.
9. Don’t forget a home inspection. This is different from the home appraisal that your lender will require. A home inspection will make sure that the house you are about to buy doesn’t have any problems that might lead to expensive repairs in the future.

Although there are many things to take into consideration when buying a home, owning your own home can give you several benefits. Visit The Perks of Homeownership to learn more.