Buying a house can be an emotional experience, but in order to get the property that you truly want, you need to be smart. Even if you’re not paying cash upfront for the property, there are many other ways to ensure that the seller considers you over other interested parties. Apart from listening to your agent’s advice, you should also consider taking the following steps before you invest in real estate.
Clean up your credit
Your credit will affect whether or not you’ll get a better mortgage rate. Remember that there are other people interested in the same properties you’re looking to buy, so it’s a good idea to be in a better financial standing than the rest. You can check for errors on your credit reports for free by requesting a report from any of the three credit reporting agencies in the country. In addition, you should strengthen your credit score before applying for a mortgage. Generally, a credit score of 700 to 750 will get you the best loan rates.
Sellers usually favor the buyer who can offer a bigger down payment on the property. To make sure you have the upper hand over other buyers, save up enough cash to be able to offer more than the minimum down payment. Additionally, you should save up for the closing costs and loan fees, as well as have cash for up to at least three to five months of mortgage payments.
An underwritten pre-approval from a lender is almost as good as cash–something which will definitely give you a leg up on the competition. Getting pre-approved means that the mortgage lender has already looked into and verified your credit, assets, and income.
Consider other options
Admittedly, a 20% downpayment is a sizeable amount, and it’s possible you might not have that kind of cash saved up. You can look into alternative mortgage options to help you acquire the property you want. The Federal Housing Administration, for example, allows you to put a downpayment of just 3.5%, as well as work with buyers that don’t have the ideal credit score of 700 to 750.
6 Smartest Moves for First-Time Home Buyers, TIME.com