Top 10 Requirements For A Successful Real Estate Transaction
A successful real estate transaction can provide you with a home you love, and a home that will be a good investment. Read on for the top 10 requirements for a successful real estate transaction.
- A good credit score: Scores can range from 300-850. The higher your score, the lower your interest rate and the less your mortgage will cost you. If your score is too low, you may not even be able to get a mortgage at all. Get a high credit score by having a few different types of credit, not carrying a lot of debt (keep your credit card utilization to 30 percent of the available balance or less) and making all your payments on time.
- A mortgage pre-approval: Before you begin the buying process, go to a lender and get pre-approved for a mortgage. That way, you will know what you can afford. You can also get the mortgage loan faster when you do find a house to buy.
- An understanding of your mortgage: There are many different types of mortgages, from a 30 year fixed rate mortgage to an adjustable rate or a balloon. Understand the risks and benefits of each before you buy. (30 year fixed mortgages have a stable set payment; 15 year fixed rate mortgages have a stable set payment that is normally higher than 30 year mortgages but you pay off your loan faster and pay less overall; adjustable rate mortgages have a low teaser rate but then adjust according to financial indexes; with a balloon, you have a low fixed payment but then the entire balance of your mortgage comes due within a few years and you have to refinance.)
- A down payment: Banks require you to put down at least 20 percent of the price of the house. If you don’t, you will have to buy private mortgage insurance (PMI) to protect the lender; if you don’t have equity in the home and property values fall, your house could end up being worth less than you owe and thus won’t act as sufficient collateral for the loan.
- A cash cushion: When you own a home, you will have to pay for repairs or problems that come up. You want to have money to do this. You also want to have some extra cash in case you lose your job or something else goes wrong so you will be able to make your mortgage payments.
- A real estate agent: Real estate agents can help you find a house, determine if it is a good deal, make an offer and close. Since most people aren’t experts on buying a home, having professional help is usually wise.
- Knowledge of the market: You will want to know whether it is a buyers market or a sellers market. You will also want to know the property values of similar homes so you can make sure you are getting a good deal.
- Facts about the neighborhood: The location of a home is a huge determining factor in its property value. From the reputation of the neighborhood to the quality of the school district, where you live is often more important to a homes value than the appearance and style of the house itself.
- A home inspection: This can help identify problems that could turn into potentially costly financial disasters. In fact, home inspections are so important, most mortgage lenders require you to have one before they give you a loan.
- An ability to look beyond aesthetics: Minor cosmetic details such as paint or carpeting can be changed. Focus on the structure, quality and location of the house itself to find your new home.