Buying a home is an emotional experience – it can be exhilarating, thrilling and even stressful. When the time comes to sign the paperwork, don’t be surprised if you feel butterflies in your stomach, or even nauseous. You are likely making the biggest financial decision of your lifetime; hence it is perfectly normal to feel anxious about the home buying process.
Nevertheless, do not let uncertainty about the mortgage process keep you on the sidelines. The tips that have been clearly explained below will help you feel more prepared for home ownership.
According to a recent survey, most consumers have the wrong ideas about what it takes for someone to qualify for a mortgage. Most consumers believe that the requirements are more strict than they actually are. When they were asked about the crucial mortgage qualification criteria (like debt to income ratio, down payment percentage and credit score), approximately 50 percent of the consumers provided an invalid answer or selected “do not know”.
This indicates that there are many eligible home buyers sitting on the sidelines because of misconceptions about the mortgage process or anxiety about being turned down for a loan. Below are five suggestions that will help you to ease any home buying anxiety:
Learn all you can about mortgages
In the recent years mortgages have changed a lot as investors and lenders make changes reflective of the American households. For instance, several adults in the household might be working and making their contributions to the household budget.
Some of the mortgages allow lenders to consider the income that is generated from the other household members when qualifying a borrower. In addition to that, some home buyers might qualify for zero down options (100% financing), including VA loans (guaranteed by the United States Department of Veterans Affairs) for service members, veterans and surviving spouses, and the United States Department of Agriculture loans for low to middle income borrowers in qualifying rural areas.
According to the Census Bureau’s American Housing Survey, use of both types of loans is on the increase, particularly among first time buyers.
Talk to an expert
Don’t know your credit score or techniques to help you save for a home purchase? No problem. The United States Department of Housing and Urban Development (HUD) sponsors various counseling agencies all around the country that offer free or low cost pre-purchase counseling that will help you to understand the terminology you will hear from lenders. Such counseling will also help you to be able to assess your financial situation.
The work of home credit counselors is to demystify this important transaction by educating the individuals who go to them, so that when they decide to purchase a home, they know what issues they should look out for and what questions they should ask.
Explore down payment assistance
According to NeighborWorks America, a national-nonprofit community development organization that is based in Washington DC, 70% of adults in the United States are not aware of down payment programs that are available for middle income home buyers in their community,.
The percentage might even be higher since, in most areas in the United States, there are dozens of homeowner education options and down payment assistance programs.
Compare mortgage quotes
According to research conducted by Economic & Strategic Research (ESR), only one third of home buyers shop around for a mortgage. That is usually at a later stage of the process, meaning that they might be missing out on saving money.
As infrequent and large as the mortgage transaction is in the financial lives of most people, borrowers might end up not getting the best deal by opting to not shopping around. Getting a great deal can enable borrowers to sustain their mortgage even in the case of unexpected decreases in income or increases in expenses.
Consider long term costs
As any home buyer knows, there are costs you can anticipate, for example; your homeowners association fees or monthly mortgage.
There could also be unexpected costs down the road, such as paying for a new roof for your home. Home owners should set aside 3 % to 5 % of the value of their home each year to use for improvements and repairs. You will want to tuck the money away so that you do not become stressed when something goes wrong because things can, and will, go wrong.