Are you thinking about buying a house? Is this your first home or have you gone through the steps of buying a house before?
For a first-time homebuyer, the process can seem a little intimidating. However, even if you’ve done this before, buying a new home can be tedious and stressful.
You might be asking yourself, “What do I need to buy a house?” and “How do I know how much house I can afford?”
These are great questions.
We’re here to provide a little guidance. Keep reading for everything you need when buying a house.
Home loans are typically reserved for people with decent credit. For example, you’ll need a credit score of 620 or higher to apply for a conventional loan.
You should know that the better your credit score is, the more money you’ll be able to get approved for. Your credit score also dictates your interest rate. This is important, as a 1% difference will drastically affect how much money you pay over the life of your mortgage.
If you have poor credit, you still have options, however. You can apply for an FHA loan which allows consumers with credit scores as low as 500 to purchase a home.
An Understanding of Your Finances and the Costs of Homeownership
If you’re wondering, “What do I need to buy a house?” the answer is a basic financial understanding. First, you need to know your personal finances intimately. How much room is there in your budget for a new home?
This figure accounts for more than just your monthly mortgage payments. Buying and owning a home has a plethora of expenses, including:
- Realtor fees
- Closing costs
- Homeowners insurance
- Utilities and services
- Property taxes
- Yearly maintenance and repairs
Additionally, if you’re looking for gated community houses for sale, you need to consider the monthly or yearly HOA fees. These neighborhoods are typically safer and cleaner than non-gated communities. However, you have to pay for these benefits.
A Preapproval Letter
Getting preapproved for a mortgage is one of the most important steps to buying a house. The reason this falls under our list of “What do I need to buy a house?” is because preapproved offers are much more valuable than contingent offers.
If you place a preapproved offer on a house against a contingent offer, the seller will immediately choose you. You’re a safe and secure choice.
Furthermore, getting preapproved before buying a new home will tell you exactly how much money you have at your disposal. This will determine what price range you shop under for your new home. If your maximum budget or interest rate isn’t ideal, you can spend time improving your credit score before buying a house.
Are You Asking “What Do I Need to Buy a House?”
Buying a new home is never something you should do without serious thought and consideration. We hope this article provides the insight you need to get on your way.
And if you’re still wondering, “What do I need to buy a house?” stick around. Look through our blog to find more homebuying advice and financial tips. Our website was created to help people like you.