“Just sign here, make the down payment and the property is yours”. Honestly, it is a brilliant and well-constructed sales pitch with no inherent error. But how do you know when your realtor is goading you into a dangerous situation and when the option of a house is just right for you? No doubt you would very much love to put your own dream kitchen in order, set up the living room and bedroom, possibly even start up on your own garden.
This article will discuss six points which you could consider when making the decision as to whether a house would serve as a shelter and home in the future or simply add excessively to your burdens and discomfort.
1. How Much Does This House Demand from Your Income?
During your search for a suitable living space, it is almost inevitable that the realtor would start by showing you those that considerably exceed your budget. They are aware that in a bid to get their dream homes, people tend to forget about their original budgets. No matter how endearing the house, the mortgage payment on it should never be equal to, not to mention exceed 50% of your income (after payment of required taxes). Even 30% is a risk to an extent.
2. Have You Saved Up at Least 20% for Down Payment?
You should at least be able to make a down payment of about 20% of the entire amount if it is not up to 20% you might have to pay more by way of interest eventually. It might be difficult, but you could open a separate account to help in saving up this amount.
3. Determine your Exact Credit Score
Statistically, 1 in 3 credit reports has errors or mistakes. Being aware that lenders use your credit score as a determinant of your worthiness, it would be best for you to review it ahead of time. This way you know if you are to work to make it better or if you are good to go.
4. Gather Every Financial Document
Endeavor to get a hold of every document of financial importance, this way whatever document is required of you, you will be able to promptly deliver. These include bank statements, tax returns, credit card statement, etc.
5. Get Approval Before Hand
It would be better to find make all the necessary inquiries with regard to types of mortgages available to you and mortgage insurance schemes. Then get a pre-approval letter, this shows the seller or agent that you mean business.
6. Get Ready for all the Extra Spending
The spending does not end at the mortgage payment. Inspection fees, moving expenses, closing cost (title fees, recording fees, attorney fees, etc.). So, be sure that you have more than the required down payment to accommodate any unexpected fee.