First Time Home Buyer Quick Tips
So you’re ready to take the big leap to owning your first home? Well we couldn’t be happier for you but before you sign on the dotted lines we would like to share these quick tips with you that can save you from a future foreclosure, losing money in a rent to own deal, or getting denied lending.
Quick Tip #1: Don’t purchase more home than you can afford. The biggest problem that the economy and people in America today are facing is foreclosure and it simply stems from the fact that people were foolishly approved for too much house. As a rule your monthly mortgage payment should be at the very most no more than 28% of your monthly income, you should try to put enough down to get this number as low as possible to factor in possible loss in wages, unforeseen circumstances, or temporary loss of work. If you work hard to find a house that will work with your budget you can count on being spared the future heartache of a foreclosure.
Quick Tip #2: Have an emergency fund. An emergency fund can help with unexpected emergencies like a broken transmission, job loss, making a mortgage payment on a poor sales commission month, and getting your daughter braces so she can have a perfect smile fore her senior pictures. Dave Ramsey a well known financial advisor and radio show host has some great tips for building up an emergency fund and recommends 3-6 months of expenses to cover all the little things life will throw at you.
Quick Tip#3: Make sure you can get approved for lending at the end of your rent to own agreement. When entering into a rent to own agreement generally you have to put a somewhat large non-refundable down payment towards the future purchase of the home in good faith that you will purchase the home at the end of the agreement. This means that come the end of the agreement if you can’t come up with the financing to buy the house out right you could lose your entire down payment. By working with a mortgage broker and credit counselors you stand a much better chance of knowing that your credit score and finances will be good enough to qualify for the loan. Don’t rush into any rent to own agreement without making sure you can get approved by the end of the loan, or write in extension clauses to the contract so you can buy your self additional time if needed. Read our great article on how to get approved for a loan to get you headed in the right direction.
Quick Tip#4: Take the time to clean up your credit. With interest rates at an all time low you don’t have any reason why you should not invest in lowering your credit score to get the lowest possible interest rate. Read our great credit repair checklist and consult with financial professionals to fix your score.
Quick Tip#5 Our fifth and final tip is a no brainer but, make sure you choose your house wisely. Don’t rush in to anything that seems too good to be true, anything that has not been checked out by an inspector/real estate professional, and don’t fall in love with a property that will make you violate any of the above tips.
Hope these tips help in your search of the American dream of home ownership and be sure to check out our nation wide listings of rent to own, short sale, and foreclosure properties.