3 Tips for Purchasing a Home

Whether you’re a first-time homebuyer or looking to upsize or downsize your current home, preparing in advance can make the process of buying a home smooth and efficient. By conducting some preliminary research and planning, you can save both time and money.

Here are three essential tips to simplify your home buying journey.

1. Determine your budget

Understanding how much you can afford is crucial. Utilize online resources to calculate your potential monthly mortgage payments. Input the loan amount, desired term, and interest rate to get an estimate. Adjust these variables to find a comfortable monthly payment. Creating a comprehensive budget that includes your mortgage payment, home insurance, property taxes, and anticipated utility expenses, along with any ongoing debts, will ensure you’re financially prepared.

Getting pre-approved for a loan is a vital step. Lenders typically review your income, current debts, down payment amount, and credit score. A key factor is your debt-to-income ratio (your monthly debts divided by your monthly pre-tax income). Lenders typically prefer a ratio between 45% - 50%, with lower ratios being more favorable as they indicate less risk and a greater ability to afford your payment. Once pre-approved, you have the ability to make an offer to buy a home. Without a pre-approval, you are unable to make a firm offer to purchase a home.

2. Improve your credit score

A strong credit score can significantly impact your mortgage terms. Start by obtaining a free copy of your credit report, check for discrepancies or errors and work with the credit bureaus to have them corrected. Pay off any past-due balances and reduce existing debts to improve your payment history and debt-to-income ratio. These actions can improve your credit score, making you eligible for better loan rates and terms.

3. Choose a trustworthy lender

Finding a trusted partner as a lender is vital. Some lenders might steer you toward products that benefit them more than you. Mortgage brokers might receive incentives to promote certain products. It’s essential to work with a lender you trust.

At Pacific Service Credit Union, our non-commission-based approach ensures we recommend products that truly meet your needs. We offer a variety of home financing options, including jumbo loans, second homes, and investment properties. We also offer home loan down payment assistance programs.

Starting with the right information can make your entire home buying process easier and more enjoyable. For a seamless experience and trustworthy guidance, choose Pacific Service Credit Union. Happy house hunting!