Before the tips, a quip:
“The fellow that owns his own home is always just coming out of a hardware store,” said Frank McKinney Hubbard.
Be prepared for home repairs and renovations if you’re thinking about buying a new home. For more home buying tips, click on Tips and Traps When Buying a Home by Robert Irwin. And, read on for financial expert Ethan Ewing’s six tips to make buying a house easier.
6 Tips to Make Buying a House Easier
You may also want to read 10 Tips for First Time Home Buyers.
1. Know your credit score. Check your credit score before you make any decisions about buying a house. Credit scores range from 300 to 850; the median U.S. credit score is about 693. A score below 680 usually results in a borrower being charged a higher interest rate or being denied credit. In this economy, you will need a good score to qualify for a mortgage. Make buying a house easier by paying every bill on time, pay down as much debt as possible and increase income if possible to improve your chances. If possible, ask creditors for increases on your credit limits to help out the “credit available” aspect of your credit score – but don’t tap into the addition.
2. Don’t push your budget. Often, borrowers are told they can qualify for a higher mortgage than they can comfortably pay. It is wise to keep housing expenses below 35% of your total income. Consider your budget or spending plan — and make sure you have a strong emergency fund built up so that if something unplanned does occur, you’ll be able to keep your home. To make buying a house easier, you might want to consult a financial expert.
3. Know the full costs of buying. The down payment and principal and interest on a mortgage payment are only the beginning of home-related costs. Be sure to not deplete your savings or cash on hand when making a down payment on your home, since new home owners often must complete initial work on the home, such as painting, flooring, landscaping or bringing an older house up to date.
4. Understand private mortgage insurance (PMI). Mortgages with less than a 20% down payment require PMI in case the owner defaults on the loan. When the home owner pays the mortgage down to 80 percent or less of the home’s value, the home owner can request the lender to cancel the PMI on a conventional mortgage and stop paying the additional amount.
5. Check for prepayment penalties and other provisions. Some loans have a prepayment penalty, so borrowers face hefty charges if they pay it off early. This provision also can apply to future refinancing, so be forewarned. To determine if there is a prepayment penalty, review the Truth in Lending disclosure or ask your lender to find out. Prepayment penalties have come under increased scrutiny since the mortgage crisis began, so if you find your loan has one, voice your dissatisfaction directly and clearly to your lender or broker. This tip makes buying a house easier by saving you thousands in the future!
6. Consult a tax advisor. First-time home buyers — including people who have not owned a home for at least three years — qualify for a tax credit of up to $8,000 if they purchase a home before Dec. 1, 2009. The credit does not have to be repaid if the buyer keeps the home for at least three years. In addition, all home owners qualify for tax credits for certain home energy efficiency improvements made in 2009. To make buying a house easier, do your tax research!
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