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Tips for buying a home for the first time on credit

Here are some things to keep in mind when buying a home to help you avoid making a mistake in the process.

First time home purchase can be a big challenge if you don’t know the world of real estate. Therefore, it is important that you seek the help of a housing counselor or realtor and that you follow these tips for buying a home for the first time. Your transaction will be a success!

What not to do before buying a house?

  • Don’t stop paying your debts
  • Avoid changing jobs
  • Don’t make financial changes before credit pre-approval
  • Avoid buying furniture and items for your home
  • Do not change your financial institution
  • Avoid requesting new credits
  • Do not use the money for notarial expenses
  • Avoid participating in another mortgage loan
  • Don’t overdo it
  • Avoid overinvesting in your home

Don’t stop paying your debts

Among the main aspects to take into account when buying a house through mortgage loans is paying your debts on departmental cards or credit cards on the cut-off date and not delaying any payment, so your reputation in the credit bureau will not be affected.

Avoid changing jobs

A very common mistake that people make during the buying and selling process is to resign or change jobs without knowing that this will affect the number of points they have accumulated or their rating before the bank and therefore, the loan options available to them. the ones you can access.

Among the main tips before buying a house is that you stay in the same job during the buying and selling process, financial institutions review job stability to grant a loan.

Likewise, the owner or the real estate agency will confirm that you are currently working and will analyze if you are a candidate for the acquisition of a home through a loan.

If unfortunately, you are fired and you do not have other means to solve the debt that you are about to acquire, we advise you to cancel your mortgage loan application. Do not be discouraged, you can request another loan as soon as you join a new job. The important thing is not to commit to paying amounts that you will not be able to cover later.

Do not make financial changes before the pre-approval of the credit

Another tip for first home buyers that you should consider, especially if you are interested in bank loans, is to have your finances in order and not make any movements in your bank before having the pre-approval of the mortgage loan.

Do not make the mistake of changing your account money or making exuberant bank deposits, since your financial institution has the right to require you to explain the reasons why you are moving your income. Avoid looking like a person who is in the business of committing mortgage fraud.

Money that appears suddenly generates mistrust, therefore, it is important to be as transparent as possible. Keep your money in the same account for at least two months, this will show that you are a stable candidate and that you will be able to pay the mortgage payments.

Avoid buying furniture and items for your home

Although you may have already chosen your ideal home and are visualizing yourself sharing good times with your family in the dining room or watching a movie in your bedroom, we advise you to wait before buying the furniture.

Unforeseen events happen and you don’t want to have furniture thrown away in a warehouse because, in the end, you didn’t buy the house you had in mind. In addition, in the worst case, that furniture may not be suitable for the new home you choose.

Consider that any expense, without first having the mortgage credit authorized, will affect the amount of money you have available for the down payment on the house or the credit limit assigned to you.

Do not change your financial institution

To apply for a mortgage loan from a bank, you must be a bank user. If, in the middle of the loan application process, you decide to stop being a client at the institution, the bank will be forced to deny the loan because you do not meet the requirements.

To apply for a mortgage loan from a bank, it is not necessary to be a bank user. Thanks to this, you can choose between the different banks until you find the one that offers the best credit amount or in general a faster credit authorization.

However, if you have a good credit history and an account with sufficient funds in the bank to which you are going to apply for credit, it is likely that the institution will decide to grant you better loan conditions, such as a lower monthly payment, interest rates. preferential or lower monthly payments.

Avoid requesting new credits

The credit score is the score that the credit bureau assigns you in relation to the credits granted, you will have a good score if you pay on time, have job stability and request credits sporadically.

Among the aspects to take into account when buying a house, we recommend you not to acquire more credits than you need. Avoid applying for a car loan or hiring a new cell phone plan at the same time that you want a mortgage.

Do not use the money for notarial expenses

Another of the most important tips for first home buyers is to consider the notarial expenses of the home in the budget, do not waste your investment, since you will need money for the real estate appraisal, deeds and other expenses that arise at the time of acquiring the home.

We recommend that you implement techniques to save monthly expenses, reserve at least 20% or 30% of the value of the property at the time you apply for a mortgage.

Consider having an additional 8% to cover initial expenses:

  • The commission for opening is equal to 1% of the loan amount.
  • Life and unemployment insurance are equal to about 0.095% of the property’s value.
  • Notary fees (deed and real estate appraisal expenses) amount to 7% of the value of the home.

Avoid participating in another mortgage loan

When you sign as a co-owner of a mortgage, you commit yourself financially as long as it is a current loan, regardless of whether you are the owner or not. It is essential that you do not acquire another mortgage credit commitment and do not commit yourself as a guarantor or jointly responsible.

Remember that you need to obtain your own loan, keep your finances as stable as possible to be able to finish the process of buying and selling your home smoothly. Before helping a family member or close friend, put yourself first to enjoy a hassle-free purchase.

Don’t overdo it

One of the tips for buying a home for the first time that is very useful and that you should not miss is, do not overspend.

When you are in the process of buying a home, it is common for financial entities to suggest excessive monthly payments for the payment of mortgage financing, think about how long you will really need to pay off the loan and do not get carried away by suggestions that do not fit your life plan and budget.

First-time home buyers make the mistake of overestimating or underestimating their ability to pay and their decisions often affect their personal life, we advise you to find a balance and do not despair looking for financing options.

Avoid overinvesting in your home

In certain seasons, homes can increase in value, so it is recommended that a real estate agent advise you on the average price of the property, as well as the perfect time to buy your house and thus avoid investing too much.

If you attend an open house and are interested in the house, we recommend that you also seek advice from a real estate appraiser, who will inform you of the price of the real property and if it is fit to be inhabited through a commercial appraisal.

The Savvy Explorer