There has never been a time wherein buying a home is easy and straightforward. Unfortunately, while this has strongly been the case, innumerable factors tend to affect convenience of obtaining one. Furthermore, real estate property prices tend to experience sporadic changes subjecting the purchasing public to periodic increases in purchasing price or decreases.
Unfortunately, price is only one of the many factors when it comes to buying a home and with today’s rising interest rates, it might be that you are looking to buy a home as soon as possible. Much like building an emergency fund, buying a home is one of popular and undoubtedly, wiser financial planning and investment goals. However, this endeavor requires a strategic approach in your finances that would allow you to leverage how much you would pay. Backed with a solid and effective financial strategy, you might even be able to reduce the projected interest rates you are to pay. In any case, whether you are looking for a condominium unit in Ayala Cloverleaf or a house and lot elsewhere, here are some of the steps you can take to ensure that buying a home would be an easy and straightforward process:
Improve your credit
Your credit plays a pivotal role in making a difference in your mortgage rate. As much as possible, you should focus your efforts in improving your credit score. Research as much as you can online and look for free credit monitoring applications which would prompt you of any changes to your credit. Paying your debts on time, being careful of closing credit card accounts and paying as much of your debt as possible are key techniques to ensuring good credit.
Figure out how much you can afford
Knowing what you can afford is an integral aspect in any financial decision as this ensures that you would not go spending over your budget. Even if you get approved for a mortgage loan does not necessarily mean that you should take it and arbitrarily spend it. Remember, there are rules of thumb such as not spending a significant chunk of your income on mortgage payments alone. However, this can be relatively different and would largely depend on individual circumstances. Two people can have the same income but starkly different situations. One might still have to send two kids to school while the other is looking to buy a home for retirement. In any case, assess your current spending and saving needs to know how much you can realistically afford.
Save for upfront costs
More often than not, you would want to pay at least twenty percent of your home’s purchase price. This is to eliminate the possibility of having to pay for private mortgage insurance. However, be wary about dipping too far into your savings. Ensure that you would have at least 3-6 months’ worth of expenses set apart for contingencies and any emergencies. Remember, maintenance and repairs would all be in your hands and if you just have enough money in your regular accounts, then it might be best if you do not spend most of it all in one place.
Select the right loan term for your needs
The terms of your loan can leverage your spending needs. Sure, a 30-year loan might have lower monthly payments but if you are the type of homeowner who tends to splurge the money you save each month, you might want to choose a loan you can pay off sooner as it would cost you less in interest. However, if you would take advantage of your extended loan by investing them or paying down high interest debt, then a longer term might be beneficial to you.
Start house hunting
Now that you have been pre-approved for a mortgage and have assessed what you can realistically afford, it is time to find an agent whose expertise is hinged on finding homes in the neighborhoods you are actually interested in. Remember to take a look only at the homes that are within your price range. Doing so would ensure that you would not run the risk of falling in love with a place that is well outside your price range.