Don’t let uncertainty about the mortgage process keep you on the sidelines. D&R Realty offers the following five suggestions to help make sure you’re ready to buy a home, and ease any anxiety you have about the process. These tips will help you feel far more prepared for your journey to homeownership and beyond.
1. Learn all you can about mortgages
Mortgages have changed a lot in recent years as lenders and investors make adjustments reflective of American households. For example, several adults in the household may be working and contributing to the household budget.
Fannie Mae’s HomeReady mortgage lets lenders consider income from other household members when qualifying the borrower. Additionally, some buyers may qualify for zero-down options, including VA loans (guaranteed by the U.S. Department of Veterans Affairs) for veterans, service members, and surviving spouses, and U.S. Department of Agriculture loans for low- to middle-income borrowers in qualifying rural areas.
Use of both loan types is on the rise, according to the Census Bureau’s American Housing Survey, especially among first-time buyers.
2. Talk to a professional
Don’t know how to save or what your credit score is? No problem. The U.S. Department of Housing and Urban Development (HUD) sponsors counseling agencies nationwide that provide free or low-cost pre-purchase counseling to help you understand the terminology you’ll hear from lenders and assess your own financial situation.
“Our job as home credit counselors is to demystify this crucial transaction by educating the people who come to us, so that when it comes time to buy a house, they know what questions to ask and what issues to look out for,” says Rick Harper, a senior vice president at San Francisco’s Consumer Credit Counseling Services.
Alternatively, services like CreditKarma and Experian can accurately report your current credit score.
3. Explore down payment assistance
Seventy percent of U.S. adults are unaware about down payment programs available for middle-income home buyers in their community, according to NeighborWorks America, a national nonprofit community development corporation based in Washington, D.C.
“I would argue that percentage is even higher,” says Rob Chrane, president of Down Payment Resource. There are dozens of down payment assistance programs and homeowner education options in most areas, he notes. His organization maintains a database of programs you can search for free.
4. Compare mortgage quotes
Only one-third of home buyers shop around for a mortgage, according to ESR research — and that’s often at a later stage of the home-buying process, which means they could be missing out on saving money.
“As large and infrequent as the mortgage transaction is in most people’s financial lives, borrowers may be leaving money on the table by not shopping around and negotiating for the best terms they can get,” comments ESR’s Sarah Shahdad. “Getting a better deal can help borrowers sustain their mortgage even in the case of unexpected increases in expenses, or decreases in income.”
5. Consider long-term costs
There are costs you can anticipate while buying a home, like your monthly mortgage or homeowners association fees, for example.
Also be on the lookout for any unexpected costs like paying for a new roof. Angie Hicks (of Angie’s Lists) advises that homeowners set aside three to five percent of the value of their home every year to use for repairs and improvements. “You’ll want to tuck that money away so you don’t get stressed when something goes wrong — because things can, and will, go wrong,” she says.
This short list of truths about buying a home can soothe your homebuyer anxiety down to a level at which it won’t foul up your decisions or your vision. If you or someone you know needs more information on how to buy a home in Boston, please call 617-714-5674 to speak with D&R real estate professional today.