Mortgage rates are at an all-time low, especially during the post-pandemic. Purchasing a home for your family is a smart move you can capitalize on, considering that demand is still low. Although owning a home is an achievement for most, buyers should be financially prepared and well acquainted with the venture. Below are the various factors you need to consider before buying a home after the pandemic.
Clear with your lease first
If you’re a renter who intends to purchase a new house post corona, then ensure that your lease is up before moving out. Avoid breaking leases or trying to buy a house when you still have rent arrears. Most importantly, make sure you are well prepared to move out.
Have a good credit score
A good credit score reflects your finances and plays a significant role in loan and interest rates. In other words, your credit score paints a clear picture of the lending risk at hand. Since the economy is still recovering, most financial institutions need a higher credit score to give out substantial loans. It’s recommendable to inquire about your finances with your credit card company before proceeding with your mortgage application.
Purchasing your home requires you to be financially sound. For starters, you’ll need to have enough money to cover both your down payment and closing costs. It’s therefore wise to save enough before you consider purchasing a home. If possible, a 20% down payment is great, especially if you want to lower monthly payments while building on equity. Lastly, you’ll also avoid paying that extra private mortgage insurance cost your lender adds on your monthly payment when you pay 20% upfront.
Buyers need to budget for extra costs besides the total cost of the mortgage, regardless of whether they have a good credit score or not. For instance, after a home purchase, some additional fees include state tax, county tax, and property tax. There are also repair costs, maintenance fees, and other expenditures like furnishing your home, etc. It’s therefore wise to set aside extra money just in case.
Have a steady income
Before you buy a home, make sure that you have a stable income. Your lender will want to see your income history and whether it’s consistent. It’s therefore essential to provide the correct documentation as proof. If you’re employed, provide a recent pay cheque. On the other hand, if you’re self-employed, provide tax returns and other documents your lender might ask.
Before purchasing a home, do a background check of the neighborhood. Inquire on the crime rates, the amenities around, health facilities, closeness to town, etc. The bottom line is to ensure that besides the house is ideal, its location is also favorable; if not, proceed with your house hunting quest.