The 2022 real estate market felt like a roller coaster ride with sharp turns, rising and falling home prices, and soaring interest rates. Many home buyers were forced to put their dreams of buying a new home on hold. If you're hoping to buy a home in 2023, our real estate agents have important tips that will put you on the road to successful home ownership.
Keep a Close Eye on Your Credit
If you're planning to buy a home, your credit rating will have a big impact on your loan approval. When you apply for a mortgage loan, lenders will pull your credit report to check your credit score, payment history, and debt-to-income ratio. Late payments, outstanding loans, credit card debt, and a high debt-to-income ratio can cause mortgage lenders to deny your loan.
Get Pre-Approved for a Loan
Getting pre-approval for a mortgage loan is important, especially for first-time home buyers comparing prices and amenities for D.C. homes for sale. When you're pre-approved for a loan, the lender will send you an official document showing you the exact loan amount you qualify for based on your financial information, income, and credit score. Knowing a pre-approved loan amount will help you find a home within your budget and make a stronger offer to the seller.
Understand Your Loan Options
When you're looking for a new home, you should understand your loan options before you lock down a mortgage with a lender. The type of loan you choose will determine the type of home you can buy and your necessary down payment. There are four types of home loans to consider:
Save for a Down Payment
Saving for a down payment on a home purchase can be challenging, even if you have a great job and a stable income. First-time home buyers may qualify for down payment assistance through FHA and state programs, special loans and grants, and government tax breaks.
Be Ready to Commit to a Loan
Before you buy a home, make sure you're ready to commit to a mortgage loan with a term of 15 to 30 years. Buying a home is a major commitment that will impact your lifestyle, finances, savings, and spending for many years. Before you commit to a loan, make sure you have a stable income, some savings, and an emergency fund to cover at least 3 months of expenses.
Be Prepared for Closing Costs
Unless you're paying cash for a home, you can expect a variety of closing costs which are upfront expenses paid to your lender for loan services. Common closing costs include appraisal and escrow fees, attorney fees, homeowners insurance, title insurance, pest inspections, and property taxes. Closing costs can add up to 2% to 5% of your total loan amount.
If you're thinking about a move to D.C., contact us for information on neighborhoods, available properties, and prices that fit your lifestyle.