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Buying a house can be a challenge for a lot of people, because it’s not an easy thing to do, but with the good knowledge about all home purchasing details, you can do that hard task with no worries. Planning and having a clear idea about the entire process can be the pivotal point of a successful home buying for first time buyers.

So, read this article until the end to buy a house with no hassle, we will give you some tips on how to do it.

Home Buying Scenario in United States

2022 was a year that the housing market began to cool down, recovering from the pandemic related issues like high inflation percentage and fast-rising interest rates. This scenario made potential home buyers postpone their home buying dreams.

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But, in 2024, the inflation rate decreases significantly, but home prices and mortgage rates remain high.

However, now can be a good moment to purchase a house, but before starting this process, you have to consider many factors.

Tips to buy a house

See below a few tips to help you to buy a house with no hassle:

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1 – Planning

Before starting the process of buying a house, you need to be sure about your capacity to make a long-term commitment. Houses aren’t cheap, to live in a good neighborhood, with comfort, you may need to pay at least a medium price. So, it’s probable that you have to repay a home financing in the long-term. A short-term home buying scheme can be more expensive and a burden for many people.

To buy a home with no hassle, you will need to have a good planning, that understands your spending patterns, monthly income, credit score, credit utilization, etc.

So, to make a good home purchasing plan, you should consider your financial situation, carefully review your monthly income information and see the amount of money that you can save per month, to not compromise your personal finance with the repayment of a home loan.

In addition, to get access for a mortgage, you may need to provide employment details to the lender, have a copy of your latest payslips and bank statements, to ensure your ability to purchase a home and to prove your financial stability, this is a key thing in this process.

Other important things to consider are your credit score and the debt-to-income ratio (DTI).These details ensure your reliability for the lender, that is a proof of a good and healthy credit utilization.

Lenders will access your credit score to set your mortgage interest rate, for conventional mortgage rates you will need at least 620 to be considered. For Federal Housing Administration (FHA) loans you may need a minimum of 580. You can get access to your credit report and credit score in three major credit bureaus in the United States, Equifax, Experian and TransUnion, for free once a year. Banks can offer a free credit report too.

The debt-to-income ratio (DTI) is important for the lender to understand the other debts that you must pay and your credit utilization at the moment to apply for a mortgage. Lower DTI, can improve your chances to be approved for a mortgage.

The FHA standard is a 43% debt-to-income ratio as an instruction to approve a mortgage. To calculate your DTI, you need to divide your total monthly debt by your gross monthly income, after that you multiply this number by 100, to have the percentage.

With a good plan, you can be clear about your capacity to get a mortgage, your needs, documents that you will need to attach with your application, etc.

2 – Create a Budget

With structured home buying planning, you can have a good idea about your income details and your needs. To have success in this process, you should create a realistic budget, understanding how much you can afford for it. You shouldn’t spend over the limits settled in your budget.

To guide you, it’s advised to use the 28/36 rule. With this rule, your mortgage shouldn’t cost you more than 28% of your gross monthly income and your debt payments couldn’t be over 36% of your monthly earnings. That idea can support you to understand how much you can afford in a purchase of a house.

To create a budget, you will need to research average home values in the local market. Zillow can help you with this task, you can compare the prices, having a clear idea about the market current prices applied.

Buying a home with all cash isn’t common, maybe you need some financial aid to help you to cover all home purchasing costs. Probably you will need a loan to help you to cover the expenses related to this entire process.

It’s time to create a sheet with Google Sheets or Microsoft Excel to compile your financial details like gross monthly income, average cost of houses, your DTI, etc. It’s a good idea to organize your budget and to develop a good home buying plan.

3 – Choose the Right Property

Now you have a plan with a realistic budget, it’s time to choose the right place for you. First of all, you need to keep in mind: don’t overspend when buying a home, set and follow your financial boundaries. 

You need to determine what you are looking for in a house, keep in mind your demands, that will vary. For example, a yard can be more valuable for a family with children than for a family without.

So, try to fulfill your needs and desires to find the best fit for you and your family, but stay aware about little things, houses with a garage, swimming pool, yard, decks, fire pits, can be more expensive. 

One main factor that affects the house prices is location. Houses nearest to supermarkets, schools, malls, libraries, greenspaces, can be more expensive too. So, try to find a neighborhood with an affordable price to you, but keep in mind the proximity of stores and services.

4 – Look for Financing Options

A mortgage can be a good financial aid to help you buy a house, many factors will affect the amount of money you will need to repay like the period of repayment, the down payment, your credit score, etc.

A down payment will be a crucial factor to get a mortgage, see the requirements of each lender. Conventional loans may require 20% of a down payment, on the other hand, FHA loans only require a 3.5% down payment.

The most used terms used in the mortgage market are 10-year, 15-year, 20-year and 30-year. You can choose the terms that fits best with your capacity to repay the loan, remember to not compromise your monthly income with an expensive mortgage installment.

Also, try to find the best interest rates, one tip is compare offers of various lenders, to get the best interest rate and good terms. Higher interest rates can be a burden in your financial life, stay aware about all details related to it and research a lot. The higher your credit score is, the better will be your chances of getting lower interest rates.

5 – Get Preapproved For a Mortgage

Some financial institutions like banks, credit unions and online lenders offer a pre-approval letter that states the amount of money the lender can lend to you. To get it, you may need to send to the lender: recent bank statements, proof of income and a few months worth of pay stubs. You can apply for it with multiple lenders, feel free to do it.

6 – House Hunting

Create a wishlist with the houses that fits better with your desires and needs. After that, look for houses on real estate websites, in-person, social media profiles of agents, etc. 

Remember to choose a house that best fits with your priorities, take a look into your plan to have a clear idea about it.

7 – Real Estate Agent

A real estate agent can help you with the process of house hunting, providing the necessary information like your budget, locations you want to live, the terms that fit better with your plan, etc.

A real estate agent can be a good option, because you’re contacting a person that understands the local market and has an ability to negotiate better terms and interest rates.

You can hire one in real estate offices or on the internet too, try to research it on social media. Agents earn a commission on every sale they make, but you won’t pay anything for it.

After that tips, you only should do the final steps like choose the right home for you, negotiate a mortgage and with the loan borrowed purchase a house for you. 

Buying a home isn’t impossible, with these tips you can navigate through this process with more peace of mind. Realize your house dream, don’t postpone it, the pivotal factor is making a plan, do it carefully and you will achieve your goals.

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