Buying your own home is one of the biggest and most important decisions you’ll ever make in life. It takes years of preparation before you can afford to buy a house. You need to do your research to get as much information as possible, so you can avoid making any costly mistake. Here are some steps you need to take to make sure you’re ready for this big investment and you find the right property for you:
Build Your Credit Score
The best possible mortgage rates in Michigan are only reserved to those with impressive credit scores. Lenders will evaluate your financial capability, and the two most important components of that are your credit score and your monthly income. You don’t want to qualify for the minimum credit score, though. You must have an above average credit score to get better terms with your mortgage. Start building your credit score a year before you consult with various mortgage lenders.
Once you find the lender with the best mortgage terms and conditions, you must get a pre-approval letter to secure your loan. This is important because sellers usually choose potential buyers who have pre-approved loans for their own peace of mind. A pre-approved loan will also help you know how much you can actually afford. This way, you can focus on the properties that are in your price range.
Mind the Down Payment and Closing Costs
Don’t simply focus on your mortgage payment because there are still other expenses involved when you buy a house. The two most important are the down payment and closing costs. Prepare at least 20% of the property’s price as your down payment to minimize your monthly mortgage payments. Moreover, closing costs usually cover about 2% to 5% of the home’s purchase price.
Keep these things in mind to be more prepared when you finally decide to buy a home. This way, you can make more informed choices until you find the best home for you.