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Purchase Home Option

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  • Loans up to $100K. Rates from 4.99% APR**
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How to buy a house
  • Check your credit report and score
  • Find out your debt-to-income ratio
  • Figure out what you can afford
  • Get pre-qualified for a mortgage
  • Check the closing costs
  • Find the right home
  • Find a good real estate agent
  • Make an offer
  • Wrap up loose ends and move in

To buy a house may be the American dream, but it’s not a financial step you should take lightly. Owning your home comes with significant advantages, such as predictable housing expenses, the potential for value appreciation, tax benefits, freedom to make changes to your home, and lower monthly payments. However, financing your dream home can quickly turn into a nightmare.

HypeCash will helpyou get the best deal possible on your home loans. How? We make comparison shopping easy by getting lenders to complete for your business. Instead of completing multiple forms and comparing the termsand rates of endless lenders, fill in a single form and see what rates you qualify for them leading mortgage lenders. When lenders compete for your business, you win!

How to buy a house: Getting the details right matters

There are many benefits to owning a home, such as:

  • Mortgage interest deductions.
  • Property tax deductions.
  • Solid credit rating.
  • Home equity loan options.
  • Home appreciation.

However, it’s crucial to get the details right when shopping for a mortgage. A 0.5% Interest rate saving on a 30-year mortgage of $300k can save you $30,641 over the life of the loan. That’s small potatoes compared to the $116,178 you could save if you choose a 15-year mortgage instead. But this all means nothing if you can’t afford the additional $787 In monthly payments and you foreclose on your home. Choosing a mortgage with prepayment penalties could cost you thousands of dollars in fees.

Whether you’re a first-time homebuyer looking for a mortgage or you’re a seasoned investor, we have tools that can help you find the best deal available.

How to buy a house: 9 crucial steps to follow

Knowing how the process works can mean the difference between reaping those benefits or suffering the
consequences.

To avoid the latter, consider the nine factors below before you invest in a home.

Know your credit score when you buy a house

Your credit rating is one of the most important factors mortgage lenders will consider when you apply for financing.

So, the first thing you should do is check your credit score. Getting approved for a home loan is fairly easy if you have good credit.

If your score is below 600, however, you might want to hold off on applying for a mortgage until you can boost it. Otherwise, you’ll likely have to pay a substantial down payment and a higher interest rate.

Find out your debt-to-income ratio before you buy a house

Add up your total debt, including housing costs, and compare it to your total income. This number will give you your debt-to-income ratio (DTI).

Ideally, your debt shouldn’t exceed 36% of your gross income. However, the standard DTI to qualify for a home loan is 43%. It will vary from one lender to the next, though.

Regardless, make it a priority to pay off your other debts until you can get your DTI down to at least 43% (the lower, the better).

Doing so will boost your credit score and open up the door to more mortgage option.

Figure out what you can afford before you buy a house

A common mistake with home loans—which leads many people down the wrong path—is borrowing as much as a lender will agree to loan.

You may qualify for a $300,000 mortgage, for example, but that doesn’t mean you can afford to pay it back. That’s because buying and owning a home involves more than just a monthly mortgage payment.

The general rule of thumb is that your total housing expenses should be no more than 28% of your gross monthly income.
As such, it’s vital that you take time to create a detailed budget that accounts for all the guaranteed and potential extra costs of homeownership.

Homeownership expenses you should budget for:
  • Monthly mortgage payment.
  • Down payment.
  • Mortgage insurance.
  • Inspection fees.
  • Closing costs.
  • Home insurance.
  • Property taxes.
  • Homeowner’s association fees.
  • Furniture and utilities.
  • Maintenance and upkeep.

And don’t forget homeownership is full of surprises—unfortunately, some of these surprises can be expensive. So, it’s wise to include an emergency fund as well. You don’t want to have to take out another loan should you find yourself stuck with any unforeseen expenses.

You can choose between a 15-, 20-, or 30-year mortgage. The shorter the repayment period, the higher the monthly payment.

Get pre-qualified for a mortgage

Once you’ve figured out how much you can afford, the next step is to learn about the different mortgage options so you can
pick the right one.

You can get a home loan through a bank, a credit union, a private lender (a person or business). Similarly the government, or builder financing (some homebuilders will offer you incentives to finance directly through their in-house mortgage company).

The most common mortgage options include:

Conventional loan

This is a traditional loan which generally requires a credit score of 620 or higher to qualify. You’ll typically have to pay at least a 20% down payment to avoid paying for private mortgage insurance.

FHA loan

FHA loans are insured by the Federal Housing Administration. With a credit score of 580 or above, an FHA loan allows you to buy a house with a down payment as low as 3.5%.

FHA loan

FHA loans are insured by the Federal Housing Administration. With a credit score of 580 or above, an FHA loan allows you to buy a house with a down payment as low as 3.5%.

You can still get approved if your score is between 500 and 579, but your down payment will be 10%.

FHA loans charge mortgage insurance premiums—this can become more costly than private mortgage
insurance over time.

VA loans

Insured by the U.S. Department of Veterans Affairs, VA loans are designed for eligible military members and their families. There aren’t any set-in-stone credit score requirements— however, most VA lenders usually require a score of 620.

VA loans don’t require a down payment, but be prepared to pay a funding fee. Your fee will depend on a few factors including your eligibility status, down payment, and how many VA loans you’ve had.

USDA loan

USDA loans are insured by the U.S. Department of Agriculture. They were created to incentivize people to buy a house in eligible rural areas.

You won’t have to pay a down payment and you’ll generally need a credit score of 580 to be approved. Exceptions can be made, however, for people with a lower score.

You’ll have to pay an upfront and annual guarantee fee, but it’s typically lower than what you’ll find on VA and FHA loans, as well as private mortgage insurance.

Find out about closing costs before you buy a house

There are many types of closing costs you should be aware of when you buy a house.

Mortage Origination Fees and Estimated Costs
Description Estimated Cost
Originator fee $500 to $1,000
Origination fee 0% to 1.5% of loan principal
Origination points 0% to 3% of loan principal
Commitment fee $200 to $400
Doc prep (documentation preparation) fee $50 to $250
Lender fee $650 to $850
Processing fees $500 to $1200
Underwriting fee $300 to $400

Source: Survey of lenders and industry reports

Find the right home

Now that you know how much you can spend and how to find the right lender, you now need to decide what you want in a home.

Consider features and amenities that you must have (such as two bathrooms) versus those that would be nice to have (such as a pool).

While families might want to find a home close to schools, older buyers may want to be closer to shopping.

Don’t forget, as you are making your lists of must-haves and nice-to-haves, some items such as paint color and carpeting can easily be changed with a little elbow grease.

Find a good real estate agent

This is especially important if you’re a first-time homebuyer. A good realtor can help you navigate the process to create a smoother experience.

They’ll be able to identify homes based on your preferences, negotiate with the seller for a better deal, and help you see things that you wouldn’t otherwise see on your own.

The most common mortgage closing costs include:
  • Application fee.
  • Appraisal fee.
  • Attorney fee.
  • Courier fee.
  • Credit report fee.
  • Discount points.
  • Escrow fee.
  • Escrow deposit.
  • Flood determination fee.
  • Home inspection fee.
  • Homeowners association (HOA) dues.
  • Homeowners insurance.
  • Origination fee.
  • Prepaid interest.
  • Recording fee.
  • Survey fee.
  • Title insurance.
  • Title search fee.
  • Transfer taxes.
Questions you should ask your realtor before you buy a house:
  • Is there anything wrong with the house?
  • Are there any foreclosures for sale in the area? (A foreclosed home in the area is generally going to cost less, which you can use as leverage to negotiate a lower price.)
  • What is the neighborhood like?
  • Is this the seller’s prime residence or rental property?
  • Why is the owner selling?
  • How long has the property been on the market?
  • Has the property had multiple owners? If so, why?
  • What exactly is included in the final sale?
  • What would you want to know about this house if you were buying it?
  • Has there been any major work completed on the house? Can I see the planning and building consents?

If your realtor can’t answer your questions, it may be time to find a new one. Some questions to ask include:

Make an offer on a home

Before deciding on a reasonable offer, have the property appraised to help determine the value.

Your real estate agent should be familiar with the area, the current real estate market, and how to structure
an offer. Don’t be afraid to ask for their input.

And, again, you’ll want to consider these six factors before you make an offer on a home:

  • Current home-selling market.
  • Length of time the house has been for sale.
  • The condition of the home.
  • Neighborhood.
  • Comps (sale price of “comparable” homes in the area).
  • Seller motivation
Wrap up any loose ends

Once your offer is accepted, it’s time to wrap up the loose ends. You will need to:

  • Submit a non-refundable deposit (called “earnest money”).
  • Have the home inspected by a professional home inspector (if there are any repairs required, you can renegotiate your offer).
  • Get homeowner’s insurance.
  • Arrange for the utilities.
  • Have a final walk-through to ensure the condition of the property.
  • Obtain a cashier’s check for the down payment and closing costs.

On closing day, you’ll sign all the papers (be sure to read them carefully) and turn over the cashier’s check to officially transfer the home to you.

How to Buy a House: Get started today

You’re now one step closer to making your dream of homeownership a reality. Just follow the steps above to make sure you stay on the right path.

What’s more, HypeCash has made comparison shopping easy. Get ahead of the game by comparing mortgage lenders side-by-side now.

By doing so, you can be confident that you’ll end up in the right home with the right financing when all is said
and done.