Buying a house for the first time can be overwhelming. The process seems complicated and figuring out what you need can be confusing for even a veteran home buyer. When it comes to buying a house in today’s market, you will need a way to pay the mortgage, a healthy credit score, an earnest deposit and down payment, a good lender and a good realtor.
Way to pay the mortgage
Before giving you a dime in the form of a home mortgage, a lender wants to know that you can pay it back. You will need a steady record of employment, such as working for the same employer for several years. This steady record can also be working in the same field for a number of years, with regular periods of steady employment. If you are self-employed or the owner of a company, you will need to provide proof of income for at least two to three years. The only way around this requirement is to pay cash for the house.
Healthy credit score
Another factor that any lender is going to want to see is how well you manage your finances. Your credit record and score is an indicator the lender will use for verification. If your credit record is clean and your credit score healthy (over 650), you should have no problems getting a mortgage. Even those with a lower score and a few blemishes on the report can get a mortgage, but the interest rate will be higher.
Check your credit report before you start looking for a lender and make sure it is accurate. If you find that your score is low, you may want to work on improving your credit score before buying a house.
Earnest deposit and down payment
When you find a house that you want to buy, it is customary to include an earnest deposit with any offer you make. This money demonstrates your seriousness in making the offer. This earnest deposit is usually anywhere from 1 to 5 percent of your offer price.
Your lender is going to require that you have money available to make a down payment on the house. Ideally, this down payment should be 20 percent of the purchase price. However, with some loan programs, a down payment can be as low as 3 percent.
Before you go house hunting, it is a good idea to become pre-approved for your home loan. Communicate with real estate agents about which lenders they recommend. You can also speak with family and friends about their experiences. Get a lender that you are comfortable with and sit down to discuss the loan options available. Most home buyers qualify for multiple loan programs. Look for the one that is a good fit for your needs.
Go through the pre-qualification process. The lender will need to see your income statements, credit report, and down payment. With that information, the lender will come back with the proposed interest rate and how much they are willing to lend to you. Make sure you get a copy of the pre-approval letter.
Having a real estate agent help you with the home hunting process offers you certain advantages. That person has access to the latest real estate listings as well as information on recent sales and the current market. The realtor can help you find the ideal house for your family’s needs so you do not have to do all the legwork yourself. The real estate agent also knows how to negotiate the best price and terms when you make an offer.
If you are in the market for a new home, call us here at Elite Real Estate Group Amarillo, (806) 337-0883. You can also Contact Us via email and see our latest listings on our website. We look forward to meeting your real estate needs.