Tips To Assist You With A First-Time Home Purchase
Posted on: 30 June 2021
Summer is an optimal time to buy a house because of the break in school and the nice weather to provide a good backdrop for moving. But when you are considering the purchase of your first home, you will need to consider a bit more than the weather and look at your credit and debt situation as well as what type of home you want and what price you can afford. Here are some tips to help you out as a first-time homebuyer.
Evaluate Your Debt
When you are planning to buy a house, you will need your credit score to be as high as possible to help you get a good mortgage. Your mortgage broker will review your credit score and your income qualifications with your credit application to prequalify you for a loan. They can provide you with your debt-to-income ratio, which is a number used in your mortgage loan application. If you have too much debt, then it will lower your chances of getting a good mortgage loan and a low interest rate.
Take a look at how much debt you have, such as credit cards and installment loans. Look at ways you can pay off your debt and reduce it as much as possible. The more you can pay it down, the better your chances of a favorable mortgage will be. Consult with your mortgage lender about your debt situation and find out which balances would be most beneficial to pay down or off completely, and work towards this goal. There may also be a potential for you to consolidate your debt into your home loan.
Consider a Starter Home
As a first-time homebuyer, you may be tempted to look for a large home with all the features and amenities of a dream home. However, with your first-time homebuyer budget, you may not be able to afford those upgrades and larger floor plan. So, looking into buying a starter home can help your chances for moving into home ownership and can get you well on your way to owning a home with a good amount of equity.
Depending on the area you are shopping in, you may find that home prices have shot up considerably and are still increasing. This can make it difficult to buy a home, but a starter home with a lower price and less upgrades will provide you home ownership with its tax breaks and equity growth as the market continues to increase. Reevaluate your home purchase over the next few years to see how your home's value has grown, and when you sell it you can roll that equity into a newer home purchase.
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