5 Important Tips for Financing a New Home

5 Important Tips for Financing a New Home

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financing a new homeBuying a home is a big decision. Getting comfortable with the topic of financing a new home will help keep your stress level low, so you can enjoy the most rewarding experience possible. These tips below should help you when as you prepare for financing a new home.

  1. Request Your Credit Report

If you ask around there is a good chance you know at least one person who has found errors on his credit report. This happens a lot more often than you think. If your report has errors and you don’t find out until you are reviewing it with your lender, your purchase could be delayed significantly as it could take a month or more to clean up.

  1. Don’t Make Drastic Changes

This is not the time to switch careers or open extra credit cards for holiday shopping. You want your credit and work experience to look as stable as possible.

Not all mortgages are the same. You have probably heard words like “fixed adjustable arm” mentioned. The low rate of the adjustable arm is probably calling your name, but you have to understand that the interest rate is subject to change after a specific time. This means your payment could end up higher or lower. If you are more comfortable with a loan that has one payment amount throughout the term then a fixed rate is for you.

  1. Supply Lender with Proper Documents

You do not have to wait until you apply to start gathering all the essential documents you know you will need. Basic account statements should be included.

  1. Apply Before Looking

How would you feel if you got pre-qualified and after weeks of looking found your dream home, only to soon discover you can’t buy it? This happens all the time. Many lenders lure you in with an attractive interest rate and pre-qualification, but in all reality this doesn’t get you very far. Getting pre-approved is the way to go. Plus, it will give you more negotiating power. Sellers tend to favor pre-approved buyers.

  1. Determine How Much You Can Afford

If you live in a $1,000 per month apartment then you may assume a home with a $1,000 mortgage will be in your budget. Unfortunately, you may find that this is too far out of your budget once everything else is factored in. Don’t forget you have interest, taxes and insurance to work into your budget. Plus, you want a little leftover every month to save for maintenance and upgrades.

Buying a home is an exciting event, but it is also a very big decision. As you prepare for financing a new home follow these tips so as to be more prepared.

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