You’re dreaming of your perfect home. You’ve already picked the perfect area in South Florida, and you’re ready to hire a real estate agent to help. But wait a minute, there’s a few things you’ll need to do before you go house hunting.
First, check your credit score. You can do it online. Make sure all the information is true. Correct any errors and buy a FICO credit score. This way you can see what amount of a loan you qualify for. Pay off any credit cards you can to lower your debt ratio to improve your score if needed. And a good thing is that checking your own credit does not hurt your score.
Now you can make a budget and figure out how much you can afford to pay for a house. When you borrow, you’ll need to put a down payment of about 10% to 20% of the appraised value of a home. If you put down less, then 9 times out of 10 you’ll have to acquire private mortgage insurance. This will increase your monthly payment accordingly. For qualified veterans and active duty personal though, check out VA lenders because VA lenders don’t make you pay mortgage insurance without a down payment, regardless of the length of the term.
Now with these things done, figure out what your expected house expenses will be. You’ll need to figure insurance, monthly payment on credit cards, what utilities cost, car payments and any other debts you have. Your total monthly payments on your debts combined with the housing expense can’t exceed 36% of your gross income. If it does, you won’t be approved for a housing loan. You may qualify for a first time buyer program though. These payments have a lower down payment requirement. Different state and local governments may offer them in the area where you are buying your home.
When you’re finally ready to look at a house, look at a lot of them. Don’t buy the first one you see. Check out the Multiple Listings Site and browse on there. If you see a couple homes that look good, have your agent set up a house viewing. Talk to your agent and tell the realtor where you’d like to live. Look around the neighborhood. If you find a home you like, check it out at different times of the day. What might be a quiet daytime residential may be party central at night.
If you’re buying a fixer upper to sell later, the neighborhood it’s in can have an influence over the resale value. So see if it’s near a shopping area, parks or other amenities. Talk to the neighbors and get the lowdown on the neighborhood.
Buying a home, whether for personal use or for resale value, can be a complicated process. But if you’re equipped with all the correct information and find a good real estate agent, the process will much more smoothly for you.