The past decade has proven to be incredibly dynamic when it comes to the housing market. Ten years ago, the United States was still battling the effects of the Great Recession where real estate arguably suffered the most. It took until the middle of the decade for the greatest buyer’s market in history to turn into the greatest seller’s market. We’ve gone from having too many homes to sell to not having enough. Buying a home has remained a vital part of the American Dream and it’s important to come prepared to the start of a new decade.
Come Prepared with Pre Approval Loans and a Credit Score to Match
With inventory of homes for sale facing a major shortage across the nation, getting a preapproval for a home loan is more important than ever. Shopping for homes before gaining a preapproval letter is a common mistake. Pitfalls with student loans, significant recent cash deposits, and the manner in which self-employed income is reported can cause serious delays when it comes to getting a mortgage.
A credit score of 620 or above is typically the minimum score required to buy a house.
Don’t Be Tempted to Overbuy
Consider three times your income as a starting point when considering debt-to-income ratios. Don’t be enticed by beautiful photos and luxurious amenities. Get preapproval for your mortgage so you can move quickly when you do find the right house.
Preparing to Make a Down Payment
Many people think that they need 20% down. However, 6% was the median down payment for first-time home buyers in 2019. For repeat buyers, the average was closer to 16%.
Understand the True Cost of Home Ownership
When buying a home, you’ll need to be able to cover the mortgage, real estate, property taxes, and insurance. Maintenance, repairs, and utilities are also recurring costs that are important to incorporate into your overall budget.
Consider Selling When You Think About Buying
Whatever attracts you to a home will be the biggest thing to emphasize when it comes time to sell. However, it’s important to consider the less attractive aspects of the property as well. Factors that can make a location undesirable, such as close proximity to a highway or municipal waste facility, can be major flaws in the eyes of future buyers. It’s important to be sure that the price takes all aspects of the home into consideration.