IN THE MARKET TO BUY — IT’S A NUMBERS GAME
The real estate market is on the rise, and buyers are facing low inventory on affordable homes. Whether you are
looking to purchase your first home or in the market for a new home, it is crucial to get all of your numbers
in order before starting the search for a new home. Keeping these tips in mind will help make you an ideal buyer:
● The BIG 20…percent, that is. Most real
estate agents will start to take you seriously
only after providing a pre-approval letter. If
you are thinking that a home purchase is in
your future, start to look at your finances.
You’re going to need cash, and a lot of it. To
avoid PMI and paying additional fees on top of
your mortgage, aim to put down 20 percent. If
you have relatives or really great friends who
are willing to assist you in reaching the 20
percent mark, make sure you look at the rules
of receiving “gift money.” Many banks only
accept up to a certain percentage of your down
payment to be gifted.
● What is FICO and why is 720 important?
If you are in the market to buy, the letters F-I-
C-O are familiar to you. Fair Isaac Corporation,
or FICO, is a well-known software for
calculating an individual’s credit score. When
getting pre-approved by banks for a mortgage,
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it is important to have a good score. What
is good? 720. According to FICO, the median
score in the U.S. is 723. If you are looking for
great credit, shoot for anything higher than
723 (think in the 800-900 range). Most banks
will offer similar options if you are at or above
720, but if you dip below, it may be best to
start by trying to improve your credit before
buying a new home.
● Pick your budget range. It is almost
impossible to search for a home without
knowing what you can afford. Most likely you’ll
fall in love with the house of your dreams with
an updated kitchen, a claw-foot tub and a man
cave, and go to put an offer on it only to find
out it exceeds your allowable budget provided
by a mortgage lender. Heartbreak will ensue,
but you’ll get back on your feet with the
realization that you can still get the home of
your dreams; you’ll just need to narrow your
search. By this point, your Realtor will be
able to provide you with options that fit the
bill. All real estate websites also provide the
convenient option to search by neighborhoods
in your price range.
● Make an offer by choosing your numbers
wisely. When you’ve finally found THE ONE,
it’s time to make an offer. Make sure you do
your homework—find comparable houses
that were recently sold in the proximity to see
if the asking price is fair. When comparing, be
sure to take into account number of bedrooms
and bathrooms, updates made to the house,
and other factors that may determine house
price. Once you decide on a fair price, you’ll
include earnest money with your offer to show
good faith. This money will be held by your
Realtor until the deal is finalized, then will be
put toward your down payment.