What Should You Do If You Want to Buy a New House

What Should You Do If You Want to Buy a New House

The following contribution is from another author.

Buying a home is one of the most important steps you will have to take. And because it costs a lot of money and it will affect your living status, you have to put so much thought into it.

Make sure you start your research early about the available homes and their prices. Then also, ensure that you are prepared for this commitment. Here are five factors to help you buy a house.

Decide Whether You’re Ready to Buy a Home

If you’re thinking to buy a house and you don’t have enough money, in that case taking a mortgage from pekoe.ca can be your best option.  However, before giving you the loan, the lender would want to confirm that your income is stable and reliable. Therefore, make sure you prepare the right documentation to prove that your employment is steady. Some of the things that can help you decide whether or not to take this step are;

• Your Income and Employment Status- Those on payroll will need to provide stubs and W-2s. But if you are self-employed, the lender may ask for your tax returns and other documents.

• Your Debt to Income Ratio- mortgage lenders use this to decide whether or not to give you the loan. It shows how much you spend your monthly income on debt. So using this, a lender can evaluate the amount of mortgage debt you can handle. Please review your DTI before applying for the loan. Most times, you’ll need a DTI of 50% or less. But this depends on the loan type, lender, and other factors.

• Credit Health- the loans and interest rates you qualify for depend on your credit score. Those with high credit are offered better loan options than someone who has a low credit score. Most home loans will require a credit score of at least 620. But if yours is above 720, you can enjoy the best loan terms.

Another thing to help you decide whether you are ready to buy a home is if you are willing to live in one place for a long time. Mortgage commitments are usually long term and while you don’t need to live in your home for the entire term, you still need to think about this. Think about your family obligations, career goals, etc., when deciding whether you want to live in the home you’ll purchase.

Calculate How Much House You Can Afford

Now that you are sure you want to buy a house, you should then have a budget in mind. If you have the cash saved, well and good. But if you are planning to take a mortgage, you need to calculate your DTI ratio. Think about how much money you are making and what percentage of it goes into paying debts. Then, determine how much you can spend each month on a mortgage. Although homeownership relieves you of paying rent, it comes with several other costs that may stress your finances. For instance, homeowners need to pay for homeowner’s insurance and property taxes. So when making a budget, please factor in all these things.

Save For a Down Payment and Closing Costs

Other than mortgages, you can pay for a house purchase through savings and investments. Some relatives can give you gift money to cater to your down payment. However, your lender may need a gift letter. So make sure that you have it.

The down payment and closing costs are crucial expenses when buying a home. Most homeowners think they need a down payment of 20%. However, this isn’t always true. Thankfully, buyers who can’t afford this can get lower options. For instance, FHA loans require a minimum of 3.5% and USDA loans don’t even need an eligible borrower to put anything down.

However, making a large down payment offers various advantages, including you will get more mortgage offers and your interest rate will be low.

You’ll also need to pay the closing costs, which vary depending on several factors. A wise idea is to prepare for 3-6% of the total home costs. For instance, if the home is worth $200000, the closing cost can be $6000-$12000.

Get Preapproved for a Mortgage

Before you start hunting for a house, make sure that you get preapproved for a mortgage. Lenders often give borrowers a preapproval letter that indicates the money they’re eligible for, depending on their income, assets, and credit. Your real estate agent can help you search for homes that are within your budget once you show them your preapproval letter.

Simply apply preapproval for a mortgage with the lender. Prepare to answer questions about your income, assets, and the home you’d like to buy. Also, prepare for a credit check.

Buy a Nice Furniture

Your new home will be different from your current. Therefore, you will need different furniture. And this is true, especially if you are moving to a bigger house. So when writing a budget, please factor in the new furniture you will need.

If you don’t have money planned for this, you can get some financial assistance from online lenders. Little Loans is among the best lenders who offer different loan types like same-day, bad credit, short-term loans, etc. Therefore if you don’t want to wait until you’ve saved enough, you can always take advantage of loans from this lender.


Buying a house can be a long and exhausting process. However, with enough preparation and research, you can get the best offers within your price range.


Eric is the creator of At Home in the Future and has been a passionate fan of the future since he was seven. He's a web developer by trade, and serves as the Director of Communication and Technology for a large church in Nashville, TN (where he and his family are building a high tech home in the woods).


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