Buying a house isn’t as complicated as you might think. However, there are some home buying secrets that can make the process easier and more successful, especially if you’re new to buying a home.
Home Buying Secrets
These seven secrets can help you buy a home like an expert, even if you’re a novice.
Fixed Rates vs. Variable Rates
One of the most important home buying secrets to understand before you get a mortgage is the difference between a fixed rate mortgage and variable rate mortgage.
A fixed rate mortgage has a fixed interest rate that doesn’t change over time. So, if you get a 30-year fixed rate mortgage, your interest rate will remain steady throughout the 30-year term. A variable rate mortgage means that the interest rate is set for a specific amount of time, then can change after that point within a specific margin.
Knowing the difference makes it easier to choose the right option for you. For example, fixed rate options help you keep to a set budget, but the rate may be higher.
Variable rate mortgages may start off with a lower rate, but then it could increase. So, if you can pay it off sooner, it may be a good choice.
Why It May Make Sense to Buy an Ugly House
There is nothing wrong with a fixer upper! Ugly houses can still be a worthwhile investment. Just look at the big picture: does the house have a great structure? Is the location worth it?
There are plenty of elements that can make a home worth upgrading. Ugly homes may cost less, leaving you more money for potential renovations. Make sure you consider what would need to be done and how much time and money it would take.
Zoning Rules and How They Impact Renovation
Before you buy that ugly house or any house that may need renovations, make sure that you know the zoning rules of the home’s area. Sometimes zoning restrictions may conflict with renovations that you want.
If you find a home you love that needs a few changes, investigate zoning rules first before you make the purchase.
How to Avoid Private Mortgage Insurance (PMI)
Private mortgage insurance (PMI) is one of those costs that sometimes surprise new home buyers. It is an insurance policy that is often used to protect lenders if the borrower ends up in foreclosure.
Many lenders require PMI if the borrower puts down a deposit that is less than 20%. One way to avoid PMI is by making a down payment that is high enough. However, you can also shop around for lenders and programs that don’t require PMI.
Pre-Approval Can Help
Your home search can be much easier if you get pre-approved for a loan before you begin house shopping. You’ll be able to look within your approved budget and have a better idea of what best fits your needs.
And since the home buying process can sometimes be lengthy, pre-approval can help save you time!
Your Neighborhood is Crucial
When you buy a home, you are also buying the neighborhood. An excellent home in a mediocre neighborhood might be worth thinking about twice.
Your neighborhood can impact your home’s value. It also can create a sense of community. Make sure you choose one that fits your lifestyle.
Stay Steady with Your Money Before Buying
Lenders want to see consistency when they review your credit before you buy a home. It’s wise not to make major purchases or move your money around in the months leading up to buying a home.
Show lenders that you are trustworthy and reliable. Keep your finances steady and get the loan and home that you want!