Realtors in the greater Houston metropolitan area

1. Know your credit rating

Before you start looking for a house and shop around for a mortgage, it’s important to know your credit score. To secure the best possible loan rate, you’ll need a credit score of 740 or higher. By knowing what your credit rating is ahead of time, you can allow yourself some time to improve your rating before you start looking at houses.

One of the best ways to improve your credit rating is to pay down debt and always pay your bills on time. This could involve postponing your house hunt, but buying a house six months later is a reasonable sacrifice to make to secure a better mortgage rate.

2. Eliminate your debt first

If you haven’t entered the housing market yet and you still have debt, I highly recommend postponing your house hunt until all (or most) of you debt is eliminated. Not only will it be significantly harder to pay down your debt once you own a house, but having pre-existing debt will also affect the terms of your mortgage. Overall, you will be given a better mortgage rate if you’re debt-free.

3. Know what determines your loan terms

When a bank or lender is deciding how much money to give you, and what the terms of that lending will include, there are three factors they consider:

1) Your credit rating
2) Your income
3) Your income-to-debt ratio

Before you start shopping for a mortgage, it’s important that you know what determines your rate and terms. By understanding these factors, you can improve things such as your credit rating or income-to-debt ratio to get a better mortgage rate. It’s much easier to review these factors before you start looking for a house, rather than learning about them while you’re putting in an offer on your dream house.

4. Don’t confuse your loan amount with your spending amount

It’s critical to understand that just because a bank or lender pre-approves you for a $600,000 mortgage, doesn’t mean you can afford a $600,000 house. There are other factors to consider when it comes to your budget – such as monthly mortgage payments and closing costs. Don’t be irresponsible with your home buying decision, and don’t allow an inflated pre-approved amount sway you into buying a more expensive home than you can afford.

5. Familiarize yourself with mortgage terms

It doesn’t take long for a first-time homebuyer to feel overwhelmed by the terminology. This is why I recommend that you take an hour to research common mortgage terms online. When you have a better understanding of the terminology your mortgage broker or real estate agent are using, you will feel more comfortable with the process.

Knowing what mortgage terms mean will also give you a sense of confidence, and may also give you a better position to negotiate from.

6. Take advantage of your flexibility

More often than not, first-time homebuyers have flexibility with closing dates because they are either renting or living with their parents. This position of yours can be used as a bargaining chip when placing an offer.

7. Don’t forget closing costs

When you submit an offer on a house, and it’s approved, it’s a common mistake for first-time homebuyers to think that the down payment is all they have to pay. There are other fees involved in buying a house, and one of these fees is the closing costs. On average, closing costs can range from 2% – 3.5% of the total cost of your home purchase. Be sure to include this fee in your budget so that you aren’t surprised when you have to pay it.

Additional fees to know about are home inspections, property taxes, home insurance and moving expenses. Ask your real estate agent to provide you with a list of estimated fees to research, and then call around to find out what the actual fees might be. I recommend creating a list of fees so that you are fully aware.

8. Have a home emergency savings account

One of the biggest differences between renting and owning is that as the homeowner you are now responsible for covering the costs of repairs and upkeep. I recommend that new homeowners have some money set aside for house emergencies. This could include your roof leaking, your furnace breaking or having to buy new appliances.

It’s inevitable that these unplanned expenses will arise when you own a house, so be sure that you are prepared to cover these expenses as they come up. On top of saving for a down payment, it’s wise also to have some money set aside for these costs.

Source: thebudgetmom

About Ameri State Realty: Professional Realtors, Marisol Mendez and Esteban work together and represent early buyers for the purchase or sale of new or used homes in Houston, Cypress, Katy, Spring, Tomball, The Woodlands or any other community in the Houston area we can advise you. “I am a Real Estate Professional in the Greater Houston Metropolitan Area. It has been my greatest pleasure to have helped many families close on their properties in the Houston Area. I am committed to making sure that your buying/selling experience is an enjoyable one. I am passionate about what I do and always looking out for the best interest of my clients.”

Realtors in the greater Houston metropolitan area.

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