Living the lifestyle you've always dreamed of may seem like an impossible milestone to reach, especially during these difficult times since the pandemic. The housing market has been incredibly unpredictable and with mortgage rates as high as they are now, more people are wondering if saving for a house is even worth it at this point.
We're here to tell you that your dream can still become a reality, but not without some hard work. However, it's more than just setting a budget and putting money into a savings account.
Buying a home, in general, requires understanding different mortgage types and educating yourself on what the market values are in your desired areas. It means talking to reputable real estate agents instead of making an impulse decision to apply for a loan because you got a real estate postcard in the mail.
As we said, it's not impossible to get what you want. But first, here are a few things you'll want to consider when buying a house before hurting your credit score after several failed home loan applications.
Learn About the Housing Market First
Understanding the housing market is essential because it will help you to decide what you can realistically afford. It also can help you to understand where you should look for real estate within proximity to your desired areas. Right now as a home buyer, especially if it's your first time, you're entering the game at an incredibly competitive and costly time. While it's not as bad as it has been in recent months, you can still expect to find yourself paying more than what you would have in previous years.
Ask Yourself If Buying Is Really Right For You
Before you start browsing on Zillow or Realtor.com for your dream house, ask yourself the important question as to why you want to buy a house. If you aren't ready for the long-term commitment for a thirty-year mortgage or if you don't feel optimistic about planting down roots, you may want to reconsider for the time being.
Take Your Credit Score Seriously
Your credit score plays a significant role in what your overall interests rates will be, along with several other factors. For a $300,000 house with an extremely high FICO score of 760 to 850, for example, you can still expect to have around a 3.439% interest rate with a monthly average mortgage of $1,337.
For some people who live in more expensive cities, this may not seem like a lot. However, for some individuals who have had a life change since the pandemic, this may be more of a substantial cost than they can afford. This also doesn't take into consideration the cost of utilities, maintenance, repairs, and other personal monthly expenses.
If your current credit score isn't on the higher end of the scale, you'll want to find ways to lower or consolidate your debt before applying for any type of home loan.
Get Preapproved for a Mortgage
It's never wise to bank on one mortgage broker. You'll want to shop around with at least two to three different brokers who will be able to get you the lowest interest rate on the amount you are looking to spend. It's actually quite easy for someone to get their license to sell mortgages. That doesn't mean the person selling them has the experience to genuinely assist you as the borrower.
If this is your first time buying a home, do your research. Learn about the real estate market in your area. Educate yourself on different types of home loans and government financial aid. See what areas you could realistically see yourself living in outside of your desired city. Ask yourself the important questions to make sure you are truly ready to buy a house before making the investment.
Don't forget that there are professionals out there that can help you, too. Real estate agents are the bridge to owning your own penthouse suite or a family home in the suburbs. Whatever your questions are, they'll be here to help with years of expertise under their belts.