I Want to Own a House! Don’t You?

buying a new home

Spring is upon us and it’s a time of new beginnings – why not start with a new home?

With the rental market becoming increasingly more expensive (a whopping 5% growth in 2014), your mortgage payment could be equal to or less than the rent you pay. And, did you know that property taxes and interest you pay are tax deductible? It’s a win, win!

Oh and don’t forget as an owner you get to decide how many dogs you’ll have, the color of your living room (lime green is totally acceptable) and you’ll actually have a working stove.

You’re probably thinking this is complicated – not the case. But before you start the mortgage process, you need to do a mortgage readiness pulse check.  What’s that you ask?  We’ve spelled it out for you.

Down Payment

You know you’ll need money, but how much? Well, there are plenty of loan programs out there and the minimum required down payment is 3 percent of the agreed purchase price. You’ll also need to come up with your closing costs and depending on where you’re buying, the size of your loan, your rate, and a bunch of other stuff you’ll need some additional cash to actually close your loan.

The good news is, lenders allow gift funds so call mom, dad, Cousin Ed and Uncle Bill for a check so you can start shopping.

Credit

Check your credit today. Not only is it free, but it’s always a good idea to check for fraudulent activity.  Most lenders look for a minimum credit score of 620 and the best rates are offered to those with a 720 and higher – if you pay your bills on time, you’ll pay less for your money.

If you know your credit stinks then roll up your sleeves and do the work to fix it. Here, let’s make it easy and offer the links: Credit Karma and Annual Credit Report.

Rates

Ok rates are low – really, really low. To give you an idea, in the 80s a good rate was 18 percent and today you can expect somewhere around 4 percent. Now scrape your jaw off the floor and stop waiting for rates to drop again – money will never be free.

The bottom line? Review your financial life and be prepared to show the bank you’re ready to be the proud owner of those lime green walls.

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