Home Buying Tips from Crossland Title Inc.
Crossland Title Tennessee

Home Buying Tips from Crossland Title Inc.

Home Buying Tips from Crossland Title Inc.

Save for a Down Payment and Closing Costs

When purchasing a house, it’s crucial to budget for both the down payment and closing costs. Typically, this amounts to tens of thousands of dollars. While it may seem daunting, having a well-defined plan can make it more manageable.

According to a survey conducted by the National Realtors Association (NAR), the median down payment among homebuyers in 2021 was 12%. However, if possible, it is highly advisable to aim for a 20% down payment. Bernadette Joy, the founder of Crush Your Money Goals and contributor to NextAdvisor, suggests that putting 20% down allows for faster equity growth, lower monthly payments due to financing less, and the avoidance of private mortgage insurance (PMI), an additional cost imposed by lenders when the down payment falls below 20%.

At the very least, you should be prepared to put down 3.5%, which is the requirement for many government-backed loans.

Check Your Credit Score and Credit Report

Your credit score holds significant weight when it comes to purchasing a home, as it determines your risk level as a borrower and influences the loans and interest rates for which you qualify.

Typically, a credit score of 620 or higher helps secure better loan terms. While it is possible to qualify for a mortgage with a credit score below 600, a lower score often translates to higher interest rates, thus increasing the cost of borrowing.

To access your credit score, check your monthly bank statement or log into your online account; many credit card companies provide this service for free. Before applying for a mortgage, it’s essential to know your credit score.

Besides your credit score, it’s crucial to review your credit report. This report encapsulates your complete credit history, including new credit applications and any late or missed payments. If you come across any errors, promptly dispute them with the credit bureaus.

You can obtain your credit score for free at AnnualCreditReport.com.

Make Sure You’re Not Bound by a Lease

If you’re currently renting and considering purchasing a new home, careful planning is required. You’ll have to wait until your lease ends or potentially break your lease early. However, breaking your lease prematurely may lead to significant fines and penalties or may not be allowed by your landlord.

Crossland Title Inc.

Crossland Title Inc. provides these valuable insights to assist first-time homebuyers during their home-buying journey. By thoroughly understanding the importance of saving for a down payment and closing costs, checking credit scores and reports, and navigating lease considerations, you can approach the process with confidence and make informed decisions.