How to buy Property
With foreclosures at an all-time high, rising gas prices and an uncertain economy, buying property can seem like a difficult experience. But whether you are looking to purchase your first home or looking to buy a rental, buying property can still be a great investment. However, before you buy there are some basics that you need to know.
Get your credit report. If you need to take out a loan to buy a property, which most people do, your credit score determines the rate you receive. The higher your credit score, the lower interest rate you receive. You can use this report to determine whether you need to improve your rate by eliminating bad debt or possibly correcting incorrect information.
Find out how much property you can afford. The less debt and bigger down payment you have means you qualify for a bigger loan. However, just because the bank qualifies you for a bigger loan doesn't necessarily mean you should buy a property for this price. It's a good idea to limit your monthly payment to less than 25 percent of your monthly take-home pay.
Make an appointment with a bank or mortgage company to get approved for a loan. You don't want to spend countless hours with an agent scouring for houses and finally find the perfect property, only to have the bank deny your loan. Your credit score, income, debt, down payment and steady employment, (usually two years at the same company or in the same field) determine approval of your loan.
Obtain a real estate agent. This is the easiest and quickest way to find the property you are looking for. Agents have access to hundreds and thousands of listings and this saves you the headache of doing the search all on your own. Tell the agent what you are looking for such as how many bedrooms, amenities or location you desire and they can take you to the properties with these specifications.
Have a licensed inspector check for problems before you buy. There's nothing worse than having your dream property turn into a nightmare, when you find out a few months later that there is something seriously wrong such as termites, structural damage or other potential disasters like flooding.
Put down the largest down payment you can afford. Not only does this help you qualify to buy more property, but it costs you less. The more money you borrow, the more you pay in interest over the life of the loan. For example, if you borrow $125,000 at 6 percent on a 30-year-loan, you have paid the bank $270,000, which is $145,000 in interest.
Anticipate for closing costs. The amount of closing costs varies and is determined by your lender, title company, surveyor and others involved with your sale. It can range anywhere between 1 to 8 percent of the sale of your property. However, it generally is between 2 to 3 percent.