Purchasing a home is one of the most significant purchases you will ever make. If you are a veteran planning to take this step, consider these strategies brought to you by the Vets Help Center to prepare you for the process and inform you of veteran-exclusive options that can save you money.
Examine Your Finances
Doing your financial homework before you begin house shopping can save you time and disappointment. Start by getting a free credit check. Your score can impact your likelihood of getting approved for a loan, as well as the loan terms you may be offered.
If you discover that your credit score is not optimal, there are strategies to improve it. First, report any errors in your report. Next, prioritize paying each bill by its due date. To make sure you aren’t late with payments, employ strategies such as autopay from your bank or alerts on your computer.
It’s also important to improve your debt to credit ratio by paying off as much of your current debt as possible. If you don’t have the means to do this, you can approach it from the other direction by asking your credit card company to increase your credit line. When your credit increases while your debt remains constant, your credit score improves.
Determine Your Price Range
To set a reasonable price range for your new home, examine current income and expenditures. Then, calculate your projected monthly payments for different loan amounts, taking into account additional expenses such as utilities, property taxes, insurance, and homeowners association fees.
Consider Your Loan Options
Homebuyers have several loan options to choose from, including:
- Conventional adjustable-rate mortgages
- FHA loans
- USDA loans
- VA loans
Many veterans opt for a VA loan, which is available to active duty and veteran members of the U.S. military and their families. These are excellent options for qualified individuals because they offer generous terms that aren’t available with other loan types. A VA 30-year fixed mortgage loan, for example, eliminates the need for a down payment and offers low interest rates. The interest for these rates, however, are typically for single-family residences, and they are subject to change.
In addition to determining the best loan for your situation, you should also compare offers from several financial institutions. Because details such as interest rates, loan terms, APRs, and other fees can vary, it’s wise to shop around for the best deal. Also, apply for a loan pre-approval because it puts you in a better position for negotiating.
Use a Real Estate Company
Contact a real estate company early in the search process and let them know your budget, the type of home and neighborhood you are seeking, and which items on your wish list are must-haves. These professionals can educate you on the housing market:
- What can you expect to get within your price range?
- What is the best time of year to purchase?
- How does location influence pricing?
- Which neighborhoods are most desirable?
- What amenities and services do the neighborhoods offer?
Once you find the perfect home, your agent can use your pre-approval to move quickly, negotiate the price and closing costs, and set a closing date. At the closing, both sides sign all the necessary paperwork, and then you officially become the owner of a new home!
If you are looking forward to purchasing a new home, make sure you are fully prepared. By following several simple strategies, you can increase your confidence and be better positioned for the house-hunting process.
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