How easy is it to buy a house?
Posted On March 28, 2021
It really is pretty easy to buy a home, and it’s also a great idea at the moment, but what are the pitfalls involved? Well, we all know the obvious risks of foreclosure; I think most of us have read quite a bit about it in the newspapers.
We can put all of that behind now, because most of the laws governing risky loans have been cleared, and in any case, there is a way to make sure this doesn’t happen to you. It’s called a fixed-rate mortgage, and the amount you pay can be fixed for the number of years you specify. (More on that later).
Let’s first see how easy it is to buy a home. The first thing you need here is a credit rating. If you’ve been paying all of your bills on time, or you have a good reason why you had a lapse and are now recovered, you have a chance!
It doesn’t matter how small your credit bills are each month, what matters is whether they were paid on time or the minimum payment was paid each month. Even if your credit card limit is only $ 200.00 (is there such a credit card?) Then if it has been kept up to date, you have a good credit rating.
So the first thing on your list is to check your credit rating; This should be on everyone’s list because credit bureaus sometimes make mistakes when recording credit histories.
If your credit score is imperfect, you should take steps to clean it up and get a new credit card to start building credit. You can often get practical help with this through a government sponsored agency or debt consolidation company. You can also go to a bank.
It is better to go to a bank and get a loan to cancel your credit rating than to leave the debt on your credit history. Once your credit score is settled, you will need a credit card.
Most national banks will allow you to deposit a certain amount with them (say $ 500.00) and you can buy a credit card from them for the value of the deposit. You should not spend over the limit and you should keep your payments up to date. After about eight months of good credit, you can try a mortgage broker and explain your position and see if you can qualify.
This brings us to the next step, finding a reliable financier and one who specializes in the type of financing you need. The best place to start is your own local bank. It’s also a good idea to visit a few financiers and let them give you a quote for the type of mortgage you may qualify for.
This service is free and there is no obligation, as most people “shop around”; you may have to sign a document to allow them to verify your credit rating. Don’t sign anything else; You also want fixed mortgage quotes (preferably five years minimum).
This means that what you pay per month will stay that way for five years. Do not be tempted by this plan by lower interest rates that are not fixed rates. The variable rate and “other” types of rates can rise unexpectedly and suddenly cost more in monthly payments. This part can take a while, as it is best to only deal with one broker at a time.
Once you have found a mortgage company that you like and like, you can request a letter from them saying it is ‘pre-approved’. This means that the finance company or bank approves it in theory, but they have yet to agree with whatever house you choose.
If a home is too old, or near a floodplain, or overpriced, or for whatever reason, not fully approved, they may not want to give it 95% of the value. They may only offer 75%, or they may say “do the roof” and then extend the loan. However, this ‘pre-approval’ letter means that you are one step ahead of any other buyer making an offer that has not yet been pre-approved.
That is the first long stretch of work done. Some of the other indicators, like what type of property you are looking for and what type of real estate agent to use, are quite subjective. One thing to consider is whether the home will be easily ‘resold’ at a future date.
One tip when looking for a real estate agent is to make sure that you can easily access their web pages and that you like their personality. If you are looking for properties in foreclosure, you will want an agent who is experienced in this field.
If you are thinking about this route, sit down with your real estate agent and also with your lawyer and ask him to explain the procedures, it is a little more complex than buying a house in the usual way.
The easy part comes now because your real estate agent will walk you through most of the next steps. Making an offer, depositing a down payment, arranging a home inspection, etc., in all these things you will be guided by your agent.
If you find that you can only get pre-approved for a low amount that won’t allow you to pay for a house, then you need to save more money. The only way you can find out what your chances are is by asking.