As the events of the last few years in the real estate industry show, people forget about the tremendous financial responsibility of purchasing a home at their peril. Here are a few tips for dealing
Prepare Yourself To Buy A Home
Here are a few things you should do to prepare yourself for this adventure:
- Know your 5-Year Plan – Do you plan to stay in the South Jersey area for at least 5 to 7 more years? If not, buying a home may not be in your best interest. You will need that amount of time to build up equity and recover the costs associated with buying a new home like moving costs, closing costs, etc.
- Do Your Research - Do you know your local real estate market? If not, you would serve yourself well by finding a Realtor to help guide you; they know the local market better than anyone. Also, you need to look into the type of mortgage that is best for you. There are many options so investigate before you even start the process. Also, learn the language of home buying. What is an offer? What is PMI? What is a short sale?
- Know Your Credit Score – Do you know what your credit score is? If not, go to one of the websites that allow you to check your score for free, find out what your score is and determine if you can improve it before you ever start applying for a mortgage. The basics are; pay your bills on time, reduce your debt as much as possible (high interest rates first) and keep all unused lines of credit open. The better your credit score, the better your mortgage rate.
- Know The Costs of Buying a Home – The minimum down payment requirements range from 3.5 percent for a FHA loan to 10 - 20 percent for a conventional loan. This means for a $200,000 house, you could have to put down anywhere from $7,000 to $40,000. If you do not meet certain down payment criteria you may have to pay mortgage insurance or PMI, which helps cover the bank in case you default on the payments. There are also closing costs which could be as high as 3– 4 percent of your total purchase price. In addition, you have to consider the cost of any improvements you want to make; paint, appliances, etc. all can add up quickly. You need to really think about the amount of money you need to budget for these additional costs.
Check out some of the homes just listed in Moorestown! Call Sam Lepore with any questions!
Sam Lepore is a Realtor with Keller Williams in Moorestown, NJ. Call him today at 856.297.6827 ....