WAYZATA, Minn.- For home buyers and sellers, the arrival of spring accompanies more activity in the real estate market. For those buying their first home, it is wise to plan ahead. Dan Ament, Financial Advisor with Morgan Stanley in Wayzata visited KARE 11 Sunrise to discuss some tips for those looking for a new home.
Your down payment - Saving for your down payment can be a daunting task however the earlier you start the better off you will be. Prepare a budget and get to know your monthly spending, identifying areas you can harvest savings towards your goal of home ownership. If you have available funds in an IRA or Roth IRA, speak to your tax advisor about the first-time homebuyer provision that may allow you to access funds without an early withdrawal penalty for your down payment.
Review your credit score and reports - A key component to securing an attractive interest rate on your mortgage or even qualifying for mortgage will be your credit score. Take the time in advance to review your credit reports and work to dispute / clean up any incorrect data reported. This will help you avoid surprises when applying for your mortgage.
How much can you borrow? - Align yourself with a reputable mortgage advisor who can assist you in determining in advance what type of home loan will meet your needs and how much you can reasonably borrow based on your financial picture. Knowing that interest rates are a moving target until you actually "lock" a rate, you will need to determine a safe range to consider. Review your budget and determine what your debt-to-income ratios is (DTI). While you may qualify for a loan with a higher DTI, many suggest targeting 36% or less for your total debt payments as a percent of your income.
Research online - Once you have determined your target price range, harness the power of the web to begin searching cities, neighborhoods, schools and the specific characteristics of your home & community you to live in.
Find a good real estate professional - Connect with a real estate professional that you feel has knowledge / experience in the area you are searching and whom you feel understands your situation and objectives. While the web offers a wealth of information on prospective homes, don't underestimate the value of a great agent to navigate the process with you.