Making important decisions can be hard. One such decision that requires time and planning is buying a home. It is for this reason that you need to prepare well for the process.
You may be in the know about the low interest rates being offered by lenders and the low home prices. However, they're not enough reasons why you need to rush in purchasing the house you so desire.
First, determine your budget. You have to do a little research and find out how much you can afford. There's one website, Zillow, that has a mortgage calculator to help you figure out if you can afford to buy your dream home based on your income, the average interest rate and loan duration.
Apart from that, you also have to calculate your debt-to-income ratio. This refers to the amount taken from your income that is paid to your debts. If a large portion or more than 36 percent of your income goes to debt payments, you might not be able to obtain a loan. You need to settle your debts first and improve your credit score in order to succeed in getting a loan.
Getting pre-approved for a mortgage loan is also vital. As such, you have to achieve this first before you can even work with a real estate agent and search for a good residential property. This will save you time. Various factors are normally being considered by lenders before they pre-approve a loan applicant. These are the person's income, net worth and credit worthiness.
Once you've been pre-approved and you are aware of your budget, the next step is to find a competent real estate agent to help you look for the right home. An efficient agent should be able to provide with you information about the market prices, housing market condition and interest rates. This stage, however, may not be easy so ask for referrals from your friends, family and colleagues. Remember as well that you have the right to change your real estate agent in the event he or she fails to deliver on the work you're expecting from him.
After you have selected a residential property worth buying, make it a point to review your financial condition one more time. Determine your financial goals, both the short term and long term and do some self-assessment. Ask yourself if the home you're planning to buy is indeed what you want for your family, if you like the neighborhood and if you plan of moving to another house after several years.
Keep these tips in mind to prepare yourself before buying your home. Once you know you're ready, do not forget the other factors that matter such as the time when interest rates and home prices are low. Being aware of your financial situation as well as your future goals should guide you in making the right decision.