Buying a home can be stressful. In fact, according to one study, moving is the most stressful life event. Throw in trying to obtain a mortgage and understanding the ins and outs of home buying, and moving somewhere new goes from exciting to overwhelming right away.
While there are things you can do to make the moving process itself easier, one of the best ways to reduce the stress of buying a home is to understand a few basic things about home loans.
Theoretically, securing a loan should be something you do before you even decide on your dream house. But, even if you already have a home in mind, familiarizing yourself with some home loan tips will make the buying process easier.
So, if you need a bit of help with your home buying experience, keep reading for some useful tips.
1. Save For a Down Payment Ahead of Time
Sometimes, you’ll be able to find what seems like the perfect loan option from your lender. Maybe the interest rate is extremely low, or you’re getting more than you expected.
But, no matter how great your loan might be, you will still need some sort of down payment in order to purchase a home. Granted, there are some instances where you might be able to pay less of a down payment. But, you will still have to put some money down in order to make a purchase.
So, start saving now. Assess your monthly budget and determine how much you can set aside to put toward a down payment. This should be something you should do months ahead of time before you even consider a loan.
2. Boost Your Credit Score
If you aren’t sure what your credit score is, now is the time to check it. If it isn’t in good shape, do what you can to give it a boost. Pay off credit card bills or anything you might be financing.
A good credit score will put you in a position for a more attractive loan option. The better your credit score, the better deal you’ll get on your home loan.
3. Know What You Can Afford
If you already have a specific house in mind, you might be working on saving for it. But, it’s important to know ahead of time exactly how much you’ll be able to afford. Remember, when you’re buying a house, you have to include more than just the home itself. Consider the taxes, utilities, and general upkeep.
If you’re not sure what you can afford, try using a home loan/mortgage calculator to make it easier on yourself. The last thing you want to do is to be ‘chained’ to a house after purchasing it because you don’t have any money left over to live your life.
4. Compare Loan Offers
A good rule of thumb is to talk to different mortgage lenders before deciding on the one that fits your needs. Even if you know a lender or were referred to one, it’s okay to “shop around”. Even if all of the lenders you talk to offer the same interest rate, some may have a few extras they are willing to offer, like fewer fees.
The mortgage loan industry is run like a business. Lenders need to be competitive, and they know that. So, if one lender isn’t able to give you all of the perks you’re looking for, it is your prerogative to shop around and find one that fits your needs.
5. Keep Track of Interest Rates
Buying a home isn’t a passive process. If you really want to end up getting the best deal on your loan, stay up to date with interest rates. They can change every single day, and while you don’t necessarily need to jump into action the minute a rate goes down by one percent, keeping track of them can help you to determine when you should make a move and when you might want to hold off.
Keep in mind that even a few percentages on an interest rate can make a big difference in how much you’re paying and how much of a loan you’ll need to pay off. When the interest rates have stabilized in a comfortable area for you, it’s time to call a lender.
Don’t let the home buying process intimidate you – especially the financial side. Keep these tips in mind to make that process easier, and much less stressful. Before you know it, you’ll have the keys in your hand and you will be able to take your first steps into the next chapter of your life.