Your Complete Guide To Buying A House. Learn More Here.
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The path to owning your own home isn’t just a checkbox on life’s to-do list. It’s a journey that lasts well beyond closing day.
We want to be your go-to source for every step you make in that journey, from deciding whether to rent or buy, to how to pay for home improvement projects – and everything in between. In this guide, you’ll find articles that lead you through each part of the home buying process. The goal: to help you make informed, savvy financial decisions.
Here’s a closer look at each step in the homeownership journey, along with in-depth advice that delves deeper into each topic. You’re about to make one of the largest investments of your life. Don’t worry – we’ve got your back.
Rent vs. buy
Most people face this question at some point in their lives, but the answer is far from cut and dry. You need to consider several factors: your financial situation, distance from your job and family, and your space needs, among other things. Renting makes sense if you don’t plan to stay in place for long, or if the maintenance or upkeep of owning a home is too much for you.
Buying a home, though, builds equity and your personal wealth. When you pay rent, you’re building your landlord’s equity. To buy a home, you’ll need a significant amount of cash for closing costs and a down payment. Also, there are hidden costs: property taxes, homeowners insurance, mortgage insurance (if you don’t have at least 20 percent to put down), maintenance and repair costs, and possibly homeowners association dues.
You might crunch numbers and find that owning costs more than renting. Don’t forget, though, that home values can rise over time, even as monthly payments stay fixed. Meanwhile, landlords can always hike rent.
Types of mortgage loans
VA, Conventional or FHA? Adjustable-rate or fixed-rate mortgage? Jumbo or conforming? With so many loan options to choose from, it’s hard to know where to start. The type of loan you select will depend on a few factors: your credit profile and score, finances, debt, income, employment situation, how long you plan to stay in the home, the home’s price and your down payment amount.
Not all lenders offer every type of loan, so it’s important to compare different lenders to see which one can best help you. You can compare mortgage rates and lenders. Keep in mind that different lenders have varying requirements for different loan programs, and what passes muster for one won’t necessarily get you approved with another.
When evaluating different loan options, pay attention to the interest rate, annual percentage rate, minimum credit requirements, down payment amounts, closing costs, repayment terms and any other special features.
What to know before applying for a mortgage
Before applying for a mortgage, assess your credit and finances. Lenders will look closely at your credit history and scores, as well as your debt, income and employment history, and renting track record. Checking your credit report long before you meet with a lender can help you spot major errors or areas you need to work on. Understanding how your credit score and history impact your loan application will put you in a stronger position to get preapproved.
It’s important to have a basic understanding of how mortgages work, too. For example, when you make a down payment below 20 percent of the home’s purchase price, you’ll pay for mortgage insurance. That adds to the cost of your loan. You may also have the option to pay points up front to buy down your interest rate. Knowing what lenders look for in your application, along with strategies to save on fees and get a lower rate, will ensure you make smart decisions.