Probably the most significant purchase of your life is buying a home. And it is not something you should neglect and do without preparation. Make sure you are done with your research work before you start on the road to homeownership. Here’s what you need to take care of when buying a house.
- Figure out what you can afford
You’ve got a lot of ways through which you can determine what you can realistically afford and also how much lenders are willing to give you. Compare in-depth at what you earn to the amount you spend. See if you can find out ways to budget and save more. The bigger your savings, the lower will be your monthly payments.
- Improve your credit store
To bag the best mortgage deals higher credit score will help you out. Lenders will see you as an unreliable investment if you have a poor or average credit score. Make sure everything is accurate and you’re not penalised for old, paid or settled debts.
- Build a healthy savings account
To present yourself as a much better loan candidate in front of the lenders, it’s better to have three to five months of mortgage payments set aside in savings. Additionally, you’ll be well prepared for any big-ticket fixes.
- Get a mortgage agreement in principle
Once you’re done with sorting out your finances, calculate how much is affordable and choose the kind of property you’d like. You need a mortgage agreement in principle (AIP) for it. Though it’s not official, it’s a worthy agreement between you and a mortgage lender. The agreement says the lender is willing to lend you a certain amount towards a property. It’s better to go for an agreement as most agents won’t even an offer without one.
- Buy the home you want
Since short-term decisions can be very costly, you need to think as much as you can in this context. It would not be a wise decision to buy a tiny one-bed flat if you think you will outgrow in a year or two, keeping in mind the current state of the market. Recent statistics show that the hardest hit of the slowing housing market is the second-steppers. Around 60% of the second-steppers say that moving up the ladder is harder than getting into it in the first place.