NextHome Titletown Real Estate
Buying a home can be a fun endeavor, filled with the excitement of anticipation.
But looking at potential homes is just part of the process.
You also have to get financing to purchase that new dream home. It’s at this stage that everything can fall through – when all that excitement can turn into disappointment. To help you avoid that eventuality, here is a step-by-step guide for getting a loan to buy a house in Boston.
Here are the steps:
Begin Saving for the Down Payment
The down payment is often the biggest obstacle and highest hurdle for home buyers, and what keeps people in the annual renter cycle for many years. It is tough – a down payment is usually a sizeable lump sum of money that many Americans just don’t have sitting in their savings account. But, without sufficient funds to make that down payment, you may not be able to get a mortgage loan from a lender.
The typical down payment ranges from 3.5% to 20% of the purchase price. And that can be a substantial chunk of change.
So begin now saving for that down payment well before you set out to buy a house in Boston. You could begin by making out a budget, and then have whatever surplus you find automatically deposited from your paycheck into a dedicated savings account. And then don’t touch it.
Work on Your Credit Score
A good credit score will not only increase your chances of getting financing to buy a house in Boston but will also get you the best deal on a loan. So check your credit score and work to improve it if it’s less than optimal.
You can get a free copy (one per year) of your credit report from the three major credit reporting agencies – TransUnion, Experian, and Equifax.
Gather All Pertinent Financial Documents
Before setting out to shop for a mortgage to buy a house in Boston, you should get all your important financial documents in order. Having all these documents handy will speed up the loan application process considerably. Most lenders require at least the following:
- Last two pay stubs
- Most recent W-2
- Past two years’ tax returns
- Bank statements
Lending requirements differ based on the financial institution, so be prepared to share additional documents, such as statements from retirement accounts or monthly statements from other recurring debt, such as student loans, private loans, and car loans.
Go Mortgage Shopping
In order to buy a house in Boston, most of us will have to borrow money, that is, get a mortgage loan. But as with any large purchase, you need to do some comparison shopping because not all mortgages are created equal. Some lenders keep loans in-house as portfolio loans, while others immediately resell them on the secondary market. Depending on what a bank intends to do with the loan after closing could affect some of the loan terms.
Talk to at least three lenders and look at the differences in fees and points. It’s also a good idea to track interest rates and strike while they are lowest (which, at this writing, is right about now!)
Consider Loan Options
You should also think about the kind of mortgage that will best meet your needs when you buy a house in Boston. Will a 15-year or a 30-year mortgage best suit your unique circumstances? Do you want a fixed-rate or an adjustable-rate mortgage? The fact is that the standard old 30-year fixed-rate mortgage, while the most common, is not always the best option anymore.
Get Pre-Approved
Most agents advise buyers to get pre-approved for a mortgage in order to be perceived as a serious buyer and to have more negotiating leverage. Getting pre-approved requires almost as much financial information as applying for the loan itself.
Don’t Blow It
If you truly do want to get a loan to buy a house in Boston, don’t mess things up during the loan processing period. Your eligibility and pre-qualification hang on the fact of nothing major changing in your financial situation.
So don’t do anything that will increase your debt or lower your credit score. Don’t, for instance, apply for new credits or make a major debt-based purchase like buying a new car.
Talk to Your Agent at NextHome Titletown Real Estate
While we’re not financial advisors, our agents at NextHome Titletown Real Estate will be here to help you through the whole house-buying process, which includes securing a mortgage. Having a skilled guide can make everything go much more smoothly. So when you get ready to buy a house in Boston, don’t neglect to use a good agent. Discover how our experienced agents at NextHome Titletown Real Estate can assist you. Just send us a message or give us a call at (617) 657-9811.
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