It’s hard to hide from the headlines these days about just how competitive the housing market is right now. That’s why finding the right mortgage advice Chester County is so important.
It’s no secret that 2022 is going to be one of the most competitive housing markets in history. While that might be good for those looking to sell, it can be intimidating for buyers who are applying for mortgages. Especially in the midst of this historically competitive housing marketing.
When you’re ready to begin your home search, the key thing to understand is that knowledge is power. Being armed with the right knowledge and working with the right people is one way to make the process go smoothly. Penn Street Mortgage is here to help you along the way. As trusted mortgage lenders in Chester, take our advice to heart and follow these steps to make sure you can buy your dream home.
1. Know what your credit score is
Before you begin your house hunt, take a deep dive into your credit score. Your credit score is a crucial factor that has a huge impact on other aspects of your mortgage process. This includes rates and the type of loan you’ll apply for.
To start, pull a free credit report from the three credit bureaus: Experian, Equifax, and TransUnion. You can access those reports from annualcreditreport.com. This website is a federally-authorized website to provide free credit reports annually. From there, review your accounts and ensure the report is factually correct. Ensure there are no open accounts that aren’t yours and you aren’t delinquent on any loans.
If you do find any suspicious activity on your credit report, you can work to dispute them with the credit bureaus. They are required to investigate and must respond within 30 days.
If your credit score isn’t where you’d like it to be, there are strategies to improve it. It can be beneficial to take the time to pay down your credit card debt or decrease the money owed.
2. Know how much you can afford – and stick to that!
When you begin your house hunt, it can be valuable to get pre-approval letter. This letter from a lender ensures that you’re financially qualified to search for homes within a certain price point. The general rule of thumb is you should not be spending more than 25 percent of your total household income on a mortgage. This is known as your “debt-to-income” ratio. This ensures when you do purchase a home, you’re able to make payments in a timely manner. If your debt-to-income ratio is too high, you should actively work to reduce your debt. Reducing debt will allow you to get more easily approved for a mortgage loan and secure the best possible rates.
It’s best to speak with a lender and realtor to ensure you’re looking at homes that fall within this 25 percent debt-to-income ratio. By doing this, you’ll have 75 percent of your income dedicated to expenses. Owning a home also involves added costs like home insurance, upkeep, and property taxes. If you’re looking for advice on how much house you can afford, speak with one of our mortgage experts.
3. Take a homebuyer’s education course
There are so many moving parts to buying a home. While you may think you have a solid understanding of the process, it’s best to get educated on what will be required of you and the steps involved. Fannie Mae offers a free homebuyer education course. This course walks you through the nitty-gritty of what’s involved from approval, searching to signing and closing. In fact, some banks and lenders will require first-time homebuyers to take an online class so they are fully educated on the major purchase they’re making. Taking this class before you start your home search will help you move through the process smoothly and with the proper knowledge necessary.
4. Think of buying a home as a long-term investment
The benefit of a mortgage is that your monthly payments will stay the same throughout the length of the loan. There may be exceptions like taxes and home insurance which can sometimes fluctuate. Meaning, that no matter what your income is or what the real estate market does, your mortgage payment every month remains the same.
This means that the longer you stay in your home, the more equity you will build and the more your investment will pay off. Most industry experts recommend only buying a home if you plan on staying in it for five years. This helps to ensure maximum return on your closing costs and build enough equity to make it worth it. Buying a home just to flip it or to quickly sell it can be a risky decision and one that could cost you financially.
5. Have a team of experts on your side
Navigating the complexities of the housing market requires a team of experts on your side that are well-versed in the market. From a knowledgeable realtor to a resourceful mortgage lender, you need to be able to trust and rely on the industry experts that will be representing you in this major purchase.
At Penn Street Mortgage, our team of lenders in Chester County is here to give you top-notch advice as you work through the homebuying process. Contact us today to learn how we can help you buy your dream home without the hassle and stress.