The first thing you should consider if you plan on buying a home in Albuquerque is how to get the necessary mortgage (unless you’re paying outright in full for your home). A mortgage is perhaps the most important financial decision of your life.
One thing to consider when buying a home is how much interest you will pay over the years. Putting 10% down on a home costing $300,000 that has 4.3% interest over 30 years will cost you about $213,000 over the term of the loan in interest. That means in total you will be paying over $500,000 after 30 years. This isn’t meant to scare or deter you, but to illustrate how much money is involved in buying a home.
Home prices are rising thanks to the improving economy and decreasing inventory. Mortgage rates are also rising, so now is the time to get on the move and be ready to take advantage of the current real estate market.
What does it take to get a mortgage?
- Improve Your Credit
Your credit history makes all the difference when it comes to qualifying for a loan and keeping a low interest rate. Look at your credit score and get credit reports to spot any errors in your credit history. If you find any errors, make sure you dispute it with the credit agency. Also, try to pay off credit cards and keep their balance under 20% of their limit. And definitely don’t apply for a new credit card before you apply for a loan.
- How Much Can You Afford?
How do you determine how much you can afford? A good way to determine that is to look fora a home that costs no more than 2.5 times what your income is for the year. You can get a more detailed estimate by using a mortgage calculator.
- Get Pre-approved
It makes a big difference to get pre-approved for a loan, as it shows the buyer you’re serious. Plus it gives you how much you can potentially borrow. The banks will check factors such as credit history, credit, and income. With a pre-approval in hand, you’re buying power will be more solid.
- Think About the Options
There are a number of mortgage options to consider. If you’re a first time home buyer or don’t have the best credit score, you may want to look into a Federal Housing Administration-insured, or FHA loan. FHA loans can help buyers with a score as low as 500. There are also fixed rate and adjustable mortgages available. Fixed rate mortgages tend to be a good option for those who want to avoid spike in their budget.
Check back on our blog every week for more real estate advice and local articles about living in Albuquerque. And make sure to follow us on Facebook for up to date real estate news for Albuquerque and surrounding areas.
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