Top 5 Home Buying Tips for 2023

1.  

   home buying tips (Apr 25th, 2024)

   Get Prequalified

Getting prequalified can take the stress out of your home-buying process. This step gives you peace of mind when you know your exact buying power. And will give you an advantage when it comes to making an offer on your dream home. During the prequalification process, your lender collects basic financial information such as your income, your assets, debts, and credit to determine your buying power in the market. Knowing How much home you can afford gives you the confidence to go out and make the best decision for you and/or your family while having peace of mind. Most trusted lenders and mortgage companies have a prequalification or preapproval tool that can typically be found on their websites for convenience. Get your prequalification letter today!

2. Lower Your Debt

One reason your buying power might not qualify you for a home is debt. Whether it's student loans, credit card balances, or even car payments, debt plays a huge factor in the home-buying process. One of the main components in your mortgage approval process is a term called the debt-to-income ratio. Your debt ratio is your monthly reoccurring debt divided by your income. For example, let's say you make $4,000 a month, and your monthly debt payments including your new house payment are around $1,700 a month, your debt-to-income ratio would be 42.5%. Themortgagereports.com states that a good debt-to-income ratio is between 36%-43%, but it's' always best to consult with your trusted mortgage adviser to find the right percentage for your unique situation.

3. Improve Your Credit

Having a good credit profile directly affects your mortgage approval.  The better your credit is, the better your interest rates and terms.  Currently, payment history makes up 35% of your credit score, so something as simple as paying your bills on time is crucial. Another thing that affects your credit score is credit utilization, which is the difference between your credit limit and your balance expressed as a percentage. Credit experts like Experian recommend that you keep your credit utilization under 30%. To qualify for certain mortgage options, you need at least a 580-credit score to be considered, but if you want better options and low-interest rates, investigate improving your credit as one of your first options.

4. Start Saving

One of the main things that could negatively impact your home-buying experience is not having enough money saved up for unexpected obstacles. As a potential homebuyer, you are going to have fees come up during each step of the process like closing costs, home inspections, down payments, and even appraisals. Although some options like a USDA loan can cover certain fees like closing costs and escrows, it's still ideal to have money saved up if that option cannot cover the full amount of your fees. When it comes down to it, closing costs usually range between 3%-6% of the loan balance, not to mention home inspections which usually average $340 across the nation, appraisals typically range from $450-$650, and your down payment which CNBC stated that the average American pays 16% of the home value, but there are mortgage options that don't require a down payment such as VA & USDA loans.  Conventional and FHA allow as little as 3% – 5% in a down payment. So, when deciding to buy a home, consider what fees and costs might also pop up during your journey because 16% of homebuyers regret the process solely because of the fees.  As mentioned before work with a trusted mortgage adviser.  A trusted adviser will walk through all your options step by step.

5. Be Patient

CNBC stated that over 64% of millennials regretted purchasing a home last year. In order not to get brought into the same statistic, always remember to be patient when it comes to deciding on a home. Purchasing a home is one of if not the most important purchases in most individuals' lives, so treat it as such and understand the importance of finding the right lender, agent, or home for your home-buying experience. Making rash and impulsive decisions could be detrimental to your journey and could lead to a costly mistake in losing your dream home, being stuck with a home you are not comfortable in, or even not being able to get a home at all. Always remember to be patient and make logical decisions because your process is unique.

   Too many people pay more than they should for their
mortgage because the lender didn’t take the time to
understand their unique situation. At JTS & Co we help
you get the best loan for your needs so you’re set up for
long-term financial success.