Steps to Take Before Purchasing a New Home

Whether you are a first-time homebuyer or an experienced homeowner, you still have to do considerable research when purchasing your next house. One of the most important steps to take is locating your credit score, as this will determine your required down payment and monthly-owed payments. Once you research your credit score, you can begin to determine your budget and finance options.

Determine what kind of loan you can afford.

If you obtain an FHA loan, this means your mortgage is secured by the Federal Housing Administration. With FHA financing, your home payment can’t exceed 31 percent of your monthly income. If you take out a conventional loan, your home expenses shouldn’t exceed 28 percent of your gross monthly income. A good idea to determine whether or not you can afford the loan is by trying to live as though you had the monthly loan obligation before signing.

Save for down payments and closing costs.

The amount you need to put down depends on your credit and financing, but you should be prepared to pay between 3.5 percent and 20 percent of the cost. In order to use FHA financing, you need to have a credit score of 500 or higher. In this credit score range, a lender would require you to put down 10 percent instead of 3.5 percent. Depending on where you live, closing costs will be between $2,300 and $4,000.

Build a savings account.

In addition to money saved for the down payment and closing costs, you should save between three to five months’ worth of mortgage payments. This shows your lender that you aren’t living paycheck to paycheck, which makes you a better loan candidate. In fact, some lenders will give you more latitude if you can show that you have a savings cushion.

If you’ve been searching homes for sale in Sierra Vista, AZ, Castle & Cooke can help you find the right house for your family. We offer homes in a range of sizes, locations, amenities, and pricing. Call (520) 378-5110 to learn more about our five housing communities.