5 Tips for Home buying in 2009
With mortgages rates getting lower you may be tempted to apply for a loan and buy a home of your own. But make sure you have saved enough for the down payment. Your credit history is another important factor to help you qualify.
As we all know, the market has been in turmoil with changes coming in every now and then. To help you survive in the midst of market crisis and buy a home without much hassle, I’ve given below a list of 5 tips to make things easier for you.
1. Save enough for the down payment: When you’re buying a home, you should try and make a down payment worth 20% of the home purchase price. For that, you’ll have to save good amount of cash.
Make sure you keep aside some cash each month. If possible, take up a part time job to increase your savings. The more you save, the higher your down payment and the less you need to borrow.
2.Negotiate with the seller: When you sign a contract with the seller, make sure he’s willing to pay a part of the closing costs. This is known as seller concession which usually ranges from 3-6% of the total closing costs.
3. Check how much you can afford: Find out how much mortgage you can afford to manage. Use the how much house can I afford calculator and check your affordability. Do this before you talk to lenders. That’s because it’s you who can determine how much you can pay for.
You need to prepare a realistic budget to find out if actually you can afford the house payment along with other expenses. Shop with a number of lenders and compare the loan offers before you choose the one that suits your financial situation.
4. Clean up your credit report: What’s your credit score? Is it in the range of 680-700s? If it’s even lower but not less than 580, you have the chance to qualify for an FHA loan. Otherwise, you’ll have to wait for some time and repair your credit before you actually buy a home.
5. Research the market: Don’t get afraid if I say you’d have to research the market. What you need to do here is, check through the local newspapers and websites and find out the housing inventory backlogs. Also look for the average time during which homes are on the market prior to sale, average sale prices, number of foreclosures in your area etc. This will help you to understand how much you need to negotiate with the seller and lender and in which way the market is turning.
Buying a home isn’t easy when market is still not able to overcome a crisis situation. However, all you need to do is, know your affordability, explore a number of options, accumulate enough savings and boost up your credit. Once these things are on way, buying a home won’t be a tedious job anymore.
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