Although everyone wants to own a house someday, many are reluctant to start the homebuying process. They fear that they will never be able to afford a house. Others believe a mortgage is not really a good debt. There are some who fear they might change their mind on where to settle down. Many also fear the hidden costs of homeownership.
It only makes sense to have doubts when buying a house. A home purchase requires long-term commitment and a considerable amount of investment. The home buying process itself is also overwhelming, adding more anxiety to the already concerned buyer.
It is not every day that one gets to buy a house. This is why enough preparation and planning are the keys to ensure a more manageable homebuying experience. If you are also one fearful buyer, you can use the following tips from the pros to better manage your homebuying fears.
Know How Much of House You Can Comfortably Afford
Many buyers would go straight to house-hunting even before they know how much money they need to buy a house. Since not everyone can afford a cash payment, it becomes a must that every homebuyer knows exactly what they can afford. Thankfully, online research makes it easier to determine how much of a house you can realistically afford.
For one, you can search for a mortgage calculator online to begin getting an idea of your financial situation. You only need to input your annual income, credit score, monthly recurring expenses. This will give you an idea of what monthly payments, down payment, and loan size you can afford before you even start the buying process.
Shopping for lenders and getting a preapproval is another way to check how much of a home loan and what type of mortgage will best suit your situation. Once you get preapproved, that’s the time you can go looking for houses. This makes the process easier since you already know the price range you can afford.
Start Improving Your Credit Score
There are many good reasons why we are often told to maintain and improve our credit score. This helps increase one’s chances of getting approved for loans with better terms and lower interest rates. The same goes when buying houses.
The higher your credit score, the more lenders are likely to win you over. Different mortgages can have varying credit score limits. Even if you are qualified for a home loan that does not have a minimum score like a VA loan, it is still best to have a good score.
FHA loans, for instance, usually require at least a 580 credit score. But for conventional loans, the minimum is 620. As early as now, make it a point to improve your score so you can have at least one requirement ticked off from your box.
Know Your Financial Options
One can buy a house with cash or a mortgage. But many are afraid of not being able to repay their lenders due to unexpected circumstances. Loss of income, an accident rendering you disable, and many other unexpected things can happen in the future. But letting your fear win won’t help you attain your dream home purchase.
Homebuyers should already plan for their future in case something happens. This is not limited to your personal emergency funds. One should also anticipate all homeownership costs as well as unexpected expenses.
Aside from your personal rainy day fund, make sure you have separate savings account for future home maintenance and repairs. You also need to set aside at least six months’ worth of your monthly expenses, including your monthly home loan payment. This will give you enough peace of mind knowing you have a few months to fix your finances in case you lose your income.
There are other ways to scrunch up enough money to cover your monthly mortgage. Aside from borrowing from family and friends, there are loan options, payment assistance, and loan modification strategies available for homeowners. Even if you are now a few months behind on the mortgage, you
