Maybe you have heard that January is a great time to start looking for a home. Or perhaps you are tired of renting and want to take the plunge and buy your own place. Whether it is a Single Family Home or something smaller, the first of the year is a great time to start looking. Inventory tends to go up and getting a jump start on the buyers who wait until spring can will increase your chances of finding what you want. However, do you know if you are ready to buy a new Home? Here are five questions you should ask yourself if you are considering purchasing a home in the next few months.
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🏦 Should I Get Pre-Approved for a Mortgage Loan?
The first question you should ask yourself is “When should I meet with a mortgage lender and get a pre-approved”? The answer is RIGHT NOW!!! An initial meeting with a lender does not require you use them but rather is a chance to ask questions. A preliminary meeting with a lender will allow you to set realistic goals in your home purchasing process. Your lender can help you determine how much your monthly payment is going to be based on price. From there you can compare those numbers with what you can afford. Once you have determined your sales price and you choose a lender, they will issue a pre-qualification letter. The benefit to meeting and choosing a lender ahead of time is that your real estate agent and the seller will know that you are serious. Most sellers require or as a minimum desire a pre-qualification letter with any submitted offers. Having this readily available will put you one step ahead of most consumers.
💳 Should I Open a Credit Card to Boost my credit score?
Secondly, if you have asked yourself, or someone has said, you should open a credit card account to boost your credit score, please know this is a mistake. In fact, opening credit cards or buying furniture, cars or anything on credit while trying to purchase a home, will affect your credit score in a negative way. Doing this will increase your debt to income ratio, which will raise your monthly interest rate on your loan. In extreme cases, if your debt to income ratio is too high, you may have to wait to purchase a home until the debt-to-income numbers are back within acceptable limits. The best advice when you are considering purchasing a home is to keep any credit cards you already have and make on time monthly payments.
💸 Is My Pre-approval Price within by Budget?
Ask yourself this…True or False: I should look for homes in a price range price range as close as possible to my approved mortgage amount? If you answered false, you are correct. You want to be sure to ask your lender for monthly mortgage payments different home prices at your initial meeting. Your approval amount does not necessarily mean that is what you can afford on a monthly basis. Expenses to factor in are whether or not the home or town house is in a homeowner’s association development. If it is, you will have monthly homeowner association dues. Homeowner’s insurance is required whether it’s a town home or a single family home. You will always pay taxes and finally you have your monthly utilities. The monthly amount the lender gave you is only for the mortgage payment so be sure to factor in these other expenses to determine what you will be comfortable what you can afford. Always leave cushion for expenses.
💲 Buyer’s or Seller’s Market?
The fourth question is, are you in a buyer’s market or a seller’s market? As a consumer you can look at days on market for active homes as one factor to determine the type of market you are in. In a seller’s market, there tends to be very low inventory and homes will have minimal days on market and seem like they are flying off the market. In some sellers markets you may see selling prices above what they were actually listed for. If you are purchasing in a buyer’s market, you will see higher days on market and you may see sellers contributing towards buyer’s closing costs more frequently. A buyer’s market will give you more leverage than a seller’s market, however, be sure to check surrounding areas because it can change city to city. Your best bet is to talk to your C4 Elite Real Estate Team agent about the type of market you are in and how best to proceed as a buyer.
🤑 Down Payment? Closing Costs?
The final question to ask yourself when deciding to buy a home is whether you have enough money saved for your down payment and closing costs.
Not every loan program requires a down payment, however, any funds you can put toward your mortgage is helpful. The type of loan program you qualify for and are going to use will determine how much if any down payment is required. This is a great question to ask your lender on your first visit as well. Be sure to understand and ask questions about PMI (Prime Mortgage Insurance) and potential grants that might be available.
As a buyer, you will have closing costs associated with your home purchase. In most cases, these cannot be rolled into your mortgage. Which means you will need to have funds available at closing for these costs. At the settlement table in Utah, the typical closing costs for a buyer are approximately 3% of the sales price. For example, if your sales price is $150,000 for a home, closing costs will range from $4000-$6000, depending on loan program. Be sure to save up for these expenses and talk to your C4 Elite Real Estate Team Agent to get an approximate amount that you can expect.
🏘️ Biggest Investment of your Life
I tell every buyer I work with that buying a home is not like buying a pair of shoes. You cannot return it if you change your mind. Purchasing a home is the biggest investment you will make in your life time. The home buying process can be challenging. However, with a professional and full time real estate agent by your side, all of these questions will be answered. The C4 Elite Real Estate Team will help make this process easy and stress free. We will help you find a lender that you feel comfortable with as well as introduce you to our team of professionals. Give C4 Elite Real Estate Team a call when you decide to purchase a home. We have experience with first time home buyers as well as those of you who have bought and sold multiple homes. We have great information at our fingertips to share so you completely understand the process.