Property ownership brings a great number of benefits, both physical and financial. You own property that you can rent to tenants, you receive tax breaks on your income, and you have the opportunity of your investment to grow as it gains equity. But first, you need to prepare in several ways to help make your home purchase go a bit more smoothly and easily. Here are some areas of preparation in your quest to find and buy a single-family home.
In order to transfer the title of a piece of real estate into your name, you need to complete its purchase transaction and pay the entire amount of the purchase price in cash or get financing where a bank pays the required funds to complete the purchase. In many situations, you as the buyer won't have the full amount of cash for the purchase, so you will need to get financing from a bank, mortgage broker, or a similar money lender.
The most traditional and common way to buy a house is to apply for a mortgage and pay a down payment and earnest money along with closing costs of the purchase transaction. If you are not able to qualify for a mortgage at the present time, you can look for a seller financing opportunity in which the seller "loans" you the money for the property, which you pay them in payments over a period of time. Keep in mind that seller financing will include your paying interest on the loan, just as a traditional loan would, which you will need to negotiate with the seller to ensure the transaction is fair. You don't want to end up paying an incredibly high interest rate just to buy a house.
Another task you can begin and early on to help your home search and purchase is to work on improving your credit. You can begin this step anywhere from several months to several years before you want to buy a home. This step is to boost your credit score to help you get a better interest rate and save money on your home purchase.
Start your credit improvement by obtaining copies of your credit reports from all three of the major credit bureaus. As you review each of your credit files, look for errors to dispute and excessive debt you can pay down. For example, look to pay down any revolving credit card accounts and close out any accounts you don't use and have paid off.