Buying a home isn’t easy.
Aisha Blake, 26, learned that when she decided to purchase and fix up a century-old house in Detroit — on her own. Her journey represents a growing trend among single American women, who are scooping up more homes than their male counterparts.
Still, even if you do have a dual income household, the homebuying process can be difficult to navigate. But the more prepared you can be, the better experience you will have.
To alleviate (some of) the headaches that come with buying a home, familiarize yourself with these myths and truths:
There’s an array of loan options that don’t require 20 percent down — in fact, this amount is rare in today’s homebuying market. According to the National Association of Realtors, 60 percent of millennials are putting just 6 percent down on average.
Saving for a big down payment can be advantageous, but you don’t want to deplete your savings or risk coming up short on your mortgage payment. Instead, you should save as much as possible for unexpected expenses.
While bypassing the real estate agent or mortgage broker can save you money in some cases, rarely does the homebuying process go so smoothly that you couldn’t benefit from expert input. A professional can help you navigate unforeseen obstacles such as a bad inspection report, a low appraisal, or the discovery of liens against the home.
Loan approval involves an underwriter sifting through hundreds of pages of documentation, as well as considering other factors like the home appraisal report. A pre-qualification letter, however, is based on a quick, preliminary analysis of your credit report. Getting the letter is a recommended early step to show you’re a serious buyer, but it doesn’t mean a loan approval is guaranteed.
Nearly 40 percent of millennials check their credit scores every month, compared to 31 percent of Gen Xers and 28 percent of Baby Boomers, according to the Chase Slate 2017 Credit Outlook. But credit score isn’t everything when it comes to buying a home.
Although it might not be ideal, many borrowers are able to secure a home loan even with not-so-stellar credit, especially if they have a significant down payment and strong income.
One thing to note: Your interest rate will likely be higher, since the lender is taking a bigger risk on you.
It takes 46 days, on average, to close on mortgage loan applications.
In other words, don’t count on finding and closing on a home before your rental lease ends next month. However…
Almost half of the homes sold in August 2016 were on the market for less than one month. People who casually go out and find something that’s perfect, but who aren’t really ready, can find themselves scrambling.
The difference between a 3.5 and a 4 percent mortgage interest rate equals thousands of dollars over 30 years.
If you’re looking to buy a home and want to secure a better interest rate on your loan, try these strategies to boost your credit:
· Pay down credit card balances
· Correct errors that may be on your credit reports
· Don’t open new credit lines
· Maintain a clear payment history
The people who have the best homebuying experiences are the ones who take the process seriously. Educate and prepare yourself, and you’ll be opening the door to your new home in no time.