Change is inevitable in the home-buying process. It can happen quickly and have a great effect. Maybe the local housing market takes a dip, or you experience an unexpected cost that reduces your down payment, or the home you want to buy goes to a higher bidder.
Navigating these changes requires a combination of research and the right partnerships. As you proceed in the process, be sure to:
- Gain insight into real estate trends in the Pennsylvania market as a preliminary step to purchasing a home.
- Find partners that will be in your corner throughout this tricky, stressful process.
If you are brand new to the process of buying a home in Pennsylvania, consider this blog post your first piece of research! Keep reading to get four helpful tips for solidifying your finances, choosing the right neighborhood, forming beneficial relationships, and getting pre-approved for a mortgage.
1. Solidify your financial situation.
Taking out a mortgage for your home is a significant financial investment, so you need to solidify your financial situation to understand your buying options.
The following list details the primary financial factors that should be in good shape prior to purchasing a home:
- Credit score: Most conventional loans require at least a score of 620. Although there are ways to purchase homes with low credit, these often come with additional costs. If your credit score is below 620, begin working to raise your credit score as soon as possible.
- Debt-to-income (DTI) ratio: A DTI ratio is the percentage of gross monthly income used to pay off debts. Lenders use this ratio to determine your borrowing risk. Typically, it is best practice to spend less than 36 percent of your income on debt.
- Down payment: Although some loans require no or a minimum down payment, a conventional loan requires a down payment of at least 20 percent.
- Closing costs: Closing costs typically add up to around 2-5 percent of the home’s price. Currently, the average home value in Pennsylvania is $237,742. Keep in mind that these costs are typically paid out of pocket, so it is essential to factor in this cost before purchase.
- Homeownership costs: Annual maintenance costs vary widely based on the house, but it’s best practice to save around one percent of the home’s value each year for repairs.
Once you have your finances in order, it is time to make a list of all the things you value in a neighborhood.
2. Find the neighborhood that’s right for you.
A neighborhood is just as important as your home’s layout and features. Keep in mind: You are in constant contact with the neighborhood around you, so it is essential to choose wisely.
Here are some factors that might help you decide which area is best for you:
- Home values: The average home values of a neighborhood will determine whether you can afford to live there. To see if buying in the area will pay off in the future, find out the historical trends in property appreciation.
- Local lifestyle: From your daily commute, to where you go out to eat, to your kid’s school, a neighborhood can impact many aspects of your life.
Be sure to stay up to date with local sources. Many of these sources are frequently updated and can inform you of high-ranking neighborhoods based on schools, home quality, safety, local stores, and more.
3. Choose a local real estate agent.
A local real estate agent will be one of your best allies in the home-buying process. They will not only show you homes and walk you through expectations, but they will also understand the area well enough to find a location that suits your lifestyle best. Contact radius and we can help you find a real estate agent in your area!
When choosing a real estate agent, be sure to find out the following by either researching their bios or asking them directly:
- Their years of experience
- Their transactions in the last year
- Their experience in your area of interest and price range
- Their reviews, including complaints and areas of excellence
Keep in mind that you can go to showings with multiple agents before signing a buyer’s agreement. This might be considered a “test drive” for the industry.
4. Get pre-approved for a mortgage.
Most sellers won’t show you their home unless you have been pre-approved for fear that the inquiry might not be serious. If you get pre-approved for a mortgage, you give the seller confidence that you will uphold your end of the bargain.
Here are the primary considerations for pre-approval:
- Interest rates: Many factors impact your interest rate, including the state of the economy, your financial situation, the length of your mortgage, and more. Having a lower rate can save you thousands of dollars throughout the mortgage.
- Your finances: Keep in mind that pre-approval can be affected by any changes to your finances or credit score. Be sure to make big purchases and check your credit score before getting pre-approved.
- Lenders: Your mortgage lender plays a major role in closing on your home. Check their reviews to ensure they have a proven record of happy customers.
Join the ranks of radius financial group’s happy customers!
Once you are pre-approved, the fun work begins: Choosing your perfect home. This makes a partnership with your lender that much more important.
By partnering with a Loan Officer at radius financial group, you will be in a relationship with someone who actively works to ensure the deal is closed. We are well aware that a slow process can halt the process indefinitely, so we work quickly and efficiently to ensure you land the home of your dreams.
Want to learn more about buying a home in Pennsylvania? Check out our guide, Why Become a First-Time Homebuyer in Pennsylvania?