Have you decided that it is time you had a home of your own? Are you ready to start looking for homes? Well, buying a home is not an easy task. It needs plenty of groundwork and preparations. This is the only way you will find your dream home. But, before taking the plunge into looking for homes, you need to get your finances in order. Without having the necessary source to buy homes, your efforts can turn futile.
The first thing to do is to get your free credit report from the leading credit bureaus. Getting it from three different credit bureaus is a good idea. Getting it at least six months before hunting for homes is a wise decision. The lenders will check the credit score before lending you the money. Based on your credit report, the lenders will determine the rate at which they can lend the money. It is very important to have a good credit score. If you find your score poor, then try to improve it by paying off your dues. You need at least a 620 credit score to avail mortgage. Scores of 740 and above will help you get a mortgage at low-interest rates.
Having a budget in mind before you start searching for homes is very important. It is important that you know how much you can afford to buy a home. If you do not know how to fix a budget, then follow the standard thumb rule. You should look to fix the cost of the home that is not more than 2.5 times your gross annual salary.
It is important to know the loan options. You can get to know more about it by talking to a lender. There are two types of popular loans for home buyers. The fixed rate loan is where the interest rate and the repayment amount will be same for the life of the loan. The adjustable-rate mortgage will start with an initial fixed interest rate that will be adjusted after a set period. You cannot get full money as a loan. You need to shell out at least 20 percent of the home’s price from your pocket. If you do not have so much of money to shell out, then look for low down payment VA or FHA loans.