Before you buy your next home, there are several areas that you may want to think about and discuss with whoever you may be buying a house with, unless you are buying the home solo (go you!). Doing this can make the whole, long, and sometimes stressful home buying process go much easier. It’s better to have less surprises pop up because I bet you something will pop up!
Here are some things you may want to think about before you begin your next home buying process:
What’s your credit score like?
Your credit score is very important when it comes to buying a house with a loan. Unless you are buying a house with cash, then your credit score is one of the very first things that will be looked at.
Your credit score will help determine if you will be approved for a home loan, and also what your home loan will be. If your credit score is too low, then you may be denied a home loan altogether.
If your credit score is high enough for a loan but still fairly low, then you may be offered a rather high interest rate on your home loan. A different of just a few percentage points when it comes to your interest rate on your home loan may be the difference of a few hundred dollars each month.
This is definitely something you will want to think about before starting the home buying process. This means you should watch your credit score, get your credit report, and look for ways to increase your credit score to as high as it can possibly get.
How much debt do you have?
Your credit score is important, and so is the amount of debt that you have. If you have too much debt, then the mortgage company may think you are too risky. This is because if you fall on hard times, then it may be hard to pay all of your debt payments on time and in full each month.
How stable is your job?
The stability of your job plays a big factor. In general, self-employed people usually have a harder time obtaining a mortgage than someone who works for someone.
They will also look at how long you’ve had your job. Many mortgage companies will ask that you have worked for your job for at least one or two years before you apply to have a mortgage.
Some may say that less time that is fine, but the mortgage company may increase your interest rate on your mortgage because of the increased risk of a less stable job.
Do you have a down payment?
You should always try to save for at least 20% of the home price when buying a home. If you put down less than 20% on a home, then you will most likely have to pay private mortgage insurance (“PMI"). This can be somewhere around a few hundred dollars added to your mortgage each month.
What else do you think a person should think about?
Image via Flickr by Trevor Butcher