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Your Roadmap to Successful Home Purchase
"Expert Buying Tips"
Discover a wealth of expert insights and guidance on buying your dream home. Our comprehensive buying tips cover everything from budgeting and market trends to neighborhood analysis and property inspections. Navigate the real estate landscape with confidence, making informed decisions every step of the way.
How Your Credit Score Affects How Much House You'll Be Able To Buy ?
Your credit score is now the most important factor in determining how much house you can buy, so if you are in the market for a new home, you need to understand how it affects you. In order to make it easy for mortgage companies to determine the risk of lending to you, they are using a system called credit scoring.
When lenders look at your credit report, they can instantly see how much debt you have, how reliable you are with bill payments, and if you’ve had any bankruptcies within the last several years. With your credit report, lenders get a “credit score” which takes all of this information and boils it down to a number between 300 and 900. The higher the number, the less of a credit risk you are seen to be, and this is how lenders decide which types of loans you will be eligible for.
As with all new things, there is controversy over credit scores. To be elligible for some types of loans, you require a minimum credit score without any exceptions. And credit scores fluctuate over time. In fact, the mere act of applying for credit can lower your credit score.
How to make sure you have the highest credit score possible ?
To maximize your credit score, you should avoid applying for any new credit cards or consumer loans. Don’t go to the discount store and take them up on the “No interest, no payments for one year” offer — and avoid financing a car!
After you buy your home and get your mortgage you can do all of these things, but before then it’s a bad idea. Buying things on credit hurts your credit score, and leaves less money for your downpayment. Lenders also look at this figure to decide how much money they will lend you, and how much interest they will charge you on the loan. That’s why it’s best to wait until after you’ve bought your home to go shopping for furniture and appliances. There is also another reason to wait.
Once you’ve bought your home, you can get a loan for up to 100% of your home’s value to buy anything you want. If you learn to play by the rules of the lenders’ game, you can get the best credit score possible, which improves the odds that you can get the home of your dreams.
How to Save Thousands of Dollars in Interest and Pay Your Mortgage off Faster ?
There are a few easy ways to make extra principle payments that can save you a ton of money in interest expenses and get you mortgage-free sooner than you thought possible. Here are a few simple strategies you can use:
Round your monthly payment up
The results of this simple strategy can save you a fortune and drastically reduce the length of your mortgage. As an example, if your monthly mortgage payments were $734 dollars a month, but you rounded it up to $800 per month, you would save more than $48,000 in interest payments, and reduce the length of your mortgage by 7.5 years!
Make One Time Pre-Payments Using Your Income Tax Refund
This is an easy way to save money and shorten your mortgage. For example, if you have a $100,000 mortgage, and you have a $1000 tax refund this year, you take apply that refund to your mortgage. Over time, this will save you more than $8600 and shave 1 year and 1 month off your mortgage! That’s another amazing result from a simple strategy.
Choose a 15 Year Mortgage
If you can afford it, you are far better off getting a 15 year mortgage instead of 30. It won’t cost you much more, and the interest savings are truly incredible. If you have a mortgage of $100,000 at 8% interest over 15 years, your monthly payment would be about $200 more, but you’d end up saving $92,083 in interest over the life of your mortgage!
Using these strategies is the easiest way to reduce your interest expenses and shorten your mortgage period.
Avoid these Mistakes that Home Buyers Make
Not knowing what they can afford before making an offer.
The best way to avoid this is to get pre-approved for a mortgage so you know exactly how much you can afford. Usually pre-approvals are free.
Not knowing who the agent represents.
Unless an agent is working as your buyer representative, they represent the seller. Many people don’t realize this.
Choosing the wrong mortgage.
A bad choice can cost you thousands in taxes and interest. You should consult a mortgage agent and ask them to spell out the total cost of borrowing for each option. Also important to know the penalties you have to pay if you break the mortgage early. This will enable you to make an informed decision that lines up with your purchase goals.
Not finding problems with the home before buying it.
You should always have a certified home inspector look at the home before buying it, otherwise you could be looking at huge repair costs later on.
Not understanding how their credit can impact their ability to purchase or refinance a home.
Your credit score can mean the difference between qualifying or being rejected by a lender. If you have a low credit score, it does not have to be forever! Consult a mortgage agent/specialist to find out how you can improve your credit score.