Top Five Ways to Prepare to Buy a House in 2021

Top Five Ways to Prepare to Buy a House in 2021:

The current pandemic has made it almost impossible for many people to buy a house. But, with vaccinations now rolling out, there might still be a ray of light at the end of the dark tunnel.

To help you navigate today’s challenging property market, here are the top five ways to prepare to buy a house in 2021:

1. Check Your Current Credit Score

It is your credit score that serves as a quick snapshot of your finances. This plays an important role in the interest rates and loans you are qualified for. This gives lenders an idea of the risk of lending money to you.

As a result of the economic crisis because of the pandemic, many lenders now have more stringent standards for lending. You will need a minimum of 620 credit scores to be qualified. A higher credit score will increase your chances of qualifying for better loan terms.

2. Determine Your Budget

Make sure you know how much you can really afford before setting your eyes and heart on a specific location or house. There are different opinions on whether you should stretch your budget to get a better house or compromise your finances to have more breathing room.

However, the best and wisest thing you can do here is to consider your safety net and personal risk tolerance before you make this particular decision. Remember that a mortgage is a significant commitment so be sure to consider not only the payment that your budget can afford today but also the payments you can afford in the near and distant future.

3. Have a Constant Income Flow

Your lender will want to check your income history to ensure you have a reliable and stable source of income. It is also necessary that you provide proper documentation to show and prove steady employment. Recent W-2s and pay stubs are enough for those employed by companies. Self-employed or freelancers must submit tax returns and other documents requested by the lender.

4. Save Up for Closing and Down Payment Costs

You should have enough money to cover the costs of closing and down payment and this should be at least several thousand dollars. It may feel a bit overwhelming to save up this much for a house yet things will be more straightforward if you got a good plan in place.

5. Get Pre-Approved

This one is important because this will show sellers that there is a high chance for your purchase offer to close. Accepting an offer for sellers means that their property will be taken off the market. Once your offer has fallen through, the seller will need to undergo the whole process all over again from scratch. This delay may cost them money and jeopardize their plans to move.

It is easy to prevent these hassles if you show your seriousness through the submission of a preapproval letter from the lender together with your purchase offer. Having said this, a deal may still fall through if the appraisal for the property is not high enough, if major issues are revealed during the home inspection, or if you become unemployed, get sick, or make financial mistakes that may end up with a rejection of your approval.