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Are you looking to buy a house in St. Louis but aren’t sure where to start? Purchasing a home is probably the largest transaction you’ll encounter, and it can be stressful and overwhelming if you don’t know what to expect. The more prepared you are, the easier the transaction will be. Here are some tips to streamline your house buying experience.
Credit is Important
If you’re like most people, you’ll probably need a home loan to buy your first property. Lenders do have certain requirements that need to be met to be approved for a mortgage, the most important of which is a clean credit history. If you’re unaware of your credit standing, you’ll want to request your credit reports from all three credit bureaus. Requesting from only one may leave you in a bind as the other two may have delinquencies you might be unaware of. Go over your credit reports and verify that they accurately depict your history. If you find a discrepancy, report it to the credit bureau and ask that it be removed. Most lenders require a credit score of 720 or higher to get approved, so if you’re in need of a boost, see if there are any smaller debts that you can pay off to improve your rating. It’s best to be ahead of the game on this step, as the credit bureaus tend to take longer to reflect payments than they do to reflect delinquencies.
Define a Budget
Being realistic in this step of the process is very important – don’t set yourself up for failure by setting a budget that you cannot realistically afford. Compile a list of all of your monthly expenditures, including smaller expenses like eating out and entertainment, and compare that to your monthly income to determine exactly how much you can afford to spend on a mortgage. Also, make sure to take into account potential property taxes, insurance, and HOA fees if you plan to buy something in a planned community.
Save, Save, Save
Saving money for a down payment and an emergency fund is crucial. If you want to set yourself up for success, it’s a good idea to have a down payment of 20% of the purchase price as this will allow you to qualify for a mortgage with an exceptional interest rate. In addition to a down payment saved for, it’s wise to have a contingency or emergency fund. As a homeowner, it’s your responsibility to cover any costs for repairs, appliances that may need to be replaced, lawn care, trash pickup, and anything else that may crop up. It’s better to be prepared for unforeseen issues ahead of time so you aren’t scrambling for a solution when the time comes. Lastly, if you’re getting a loan to buy a home, you’ll be required to pay closing costs out of pocket. Typically, these costs will include a loan origination fee, appraisal fee, home inspection fee, as well as escrow and title fees. On average, closing costs can be about 3-4% of the purchase price of the property.
Choose a Lender and an Agent
Choosing a good loan officer and real estate agent can really make the home buying process much smoother and much more enjoyable than if you do it by yourself. They’ll be your advocates and advisors, so it’s important to work with someone you trust and who will put your interests first. Shop around and ask questions to ensure you’re making an informed and sound decision. Once you’ve found your loan officer, request that they give you a preapproval letter, which shows the loan amount you’re approved for. This will help you and your agent when it comes time to make an offer. Also make sure to communicate your expectations to them. They cannot help you find the perfect home if they don’t know what you’re looking for.
Now comes the fun part: choosing your home. Do some research to determine the areas of St. Louis that you’d like to live in. Take into account the school districts, crime rates, amenities, property values, and property taxes when making your decision. You can change the layout of your home but you cannot change your neighborhood, so choosing a great area is very important. Have your agent set up showings and open houses so you can see what is out there. Keep an open mind when viewing homes but also look closely for any potential structural, electrical, or plumbing issues. Cosmetic items can be fixed easily so don’t let an ugly paint color deter you. A house doesn’t become a home until you put your stamp on it anyway.
Purchasing a home is a huge milestone that should be celebrated. Yes, it can be overwhelming, but if you prepare yourself ahead of time and have a good agent and loan officer by your side, the transaction can be smooth sailing. Do you have any tips on how to make sure the home buying process goes smoothly?