What You Will Read In This Article
- Buying A House – The First Steps
- When Is The Best Time Of Year To Buy A House And Why?
- Things To Consider
For many people, buying a house is seen as a goal that is a sign of financial success and security. There are a lot of factors that can affect the housing market, and these can be affected by your personal preferences as well as external factors out of your control.
Some things that can affect the housing market include interest rates that fluctuate with the economy, desired location, and even the time of year. It is no secret that the housing market can see some drastic changes with the seasons, and a lot of home sales will happen during the warmer months.
Spring and summer help make a house look more appealing because of the brighter colors, flowers in bloom, and sun entering rooms that create a much more inviting atmosphere.
There are a lot of things to consider when you are thinking about entering the housing market, and it is important to avoid giving in to the pressures placed on people to find their own perfect place.
Because of the way that the current economy is always changing, it is worth trying not to pressure yourself into buying a house. Remember that it isn’t always a sign of success, and buying a house doesn’t always fit everyone’s personal goals.
Buying a house can be just as drastic of a process to people who already have experience within the housing market, which is why this guide offers some useful tips that can help you learn more about the buying process.
Buying a home can be a daunting prospect for first-time buyers and even people buying second or third properties. There are many things to consider when first starting to think about owning property and the commitments that come along with it.
One consideration needs to be what is the best time of year to buy a house, as the time of year can change many factors, and being aware of these might help you on your journey to finding the right house for you.
Additionally, it is worth carefully considering how the location, type of house, and economy can have an impact on your mortgage negotiations and overall moving costs. It is worth considering all of these factors before making the big financial commitment of buying a house, as there is a lot of work that will need to be done when it comes to contract deals as well as costs.
Make sure that you have access to a large savings account as it is likely that you will be faced with hidden additional costs along the way when you are buying a house.
Whether you are a first-time buyer wanting to work on your knowledge of the housing market, or if you have more experience and are simply looking to learn more about how the time of year can affect the housing market, this guide has been made to help you make the right decision.
There are a lot of variables to be aware of when you are considering buying a house, which is why this guide has been made to decide what factors you want to prioritize, and how you can focus on what matters most to you.
The world of housing can be a little intimidating, so it is worth working out whether you feel ready, and whether purchasing a house will enable you to work towards your long-term goals.
Buying A House – The First Steps
A good place to start is to first identify how much you can realistically afford to spend; this can be calculated by looking at a few different areas of your financial income and expenses.
The first area you should be taking into consideration is your income and employment status. A lender will want to know that you can reasonably afford the payments on the property and along with this they will also want to get an idea of how stable your employment is, usually requesting the past two to three years of employment history.
So, make sure you have this information to hand, usually in the form of pay stubs or W-2s. Looking into your previous outgoings, such as reoccurring monthly payments like fuel expenses, household bills, insurances will help you create a budget for how much you can pay per month towards a property.
Another area you should consider looking into, and an area lenders will also be looking at, is Debt-To-Income (DTI) ratio. Your DTI will help a lender see how much of your monthly income goes towards paying off debts.
Usually, to be accepted you need a DTI ratio of 50% or less, this is calculated by dividing your monthly debt by your monthly income.
As an example, if your monthly debt was around $1000 per month and your gross monthly income was $5000 a month your DTI would be 20%, the requirements will differ with your lender and other factors.
The next step would be figuring out how much money you can pay as a down payment on a property, this is a one-time large payment towards the purchase of your house and can range anywhere from 3 to 20% of the property’s price.
There are benefits to putting more money in your down payment, with less money to lend you will be paying less interest to the lender, and you can also bring down the amount of time it takes for you to pay off the mortgage.
While considering this, you will also need to make sure you have enough set aside for closing costs, which are fees accumulated by the lender and other third parties for setting up the loan of the property.
These can range between lenders but usually are around 3 – 6% of the property’s value. Some lenders allow these expenses to be rolled into your monthly mortgage payments or paid by seller concessions, so it is always worth asking and choosing which option would work best for you.
Your credit score is another area that lenders will be taking a look at in order to tell them how much of a financial risk you are to lend to. If you don’t know your credit score there are many easy-to-use free websites that will let you see your credit breakdown, most banks now offer this as part of their online services so do check with your provider.
A good or bad credit score can affect your options, the better the score the more likely it is that you will find a loan with lower interest rates.
Credit score checkers consider your payment history, any amount of money you owe, the length of your credit history, different types of credit you have used, and any new credit you have been looking to obtain.
There are many ways to improve your credit score, such as checking for any errors, updating any outdated credit information, the inclusion of accounts not belonging to you, etc.
These errors more often than not have a negative effect on your score, so it would be a good place to start by checking if there are any on your account.
Other ways include making sure your payments are on time and working alongside a credit counseling agency.
Your next step should then be getting preapproved for a mortgage, as this can help you and your property agent find properties that suit you and your budget.
To do this you will need to apply through your lender, answer some basic questions about things such as income, any assets you may have, and the kind of properties you would be interested in buying.
They will then take this information, along with a credit check, and create an approval, this will put you in good stead compared to rival buyers who do not have preapproval yet, and so you are not that far along in the process.