Buying a townhouse can be challenging, especially for first-timers. You must consider factors like your budget, the community, and its location. But the process becomes easier and smoother with the right support and an idea of your actions.
Making sure you’re making the right decision matters because buying a townhouse is an investment. This article outlines what you can do to help you acquire your dream townhouse!
Determine Your Budget
Before you start looking for townhouses for sale, you must first think of your budget. Knowing your financial limitations will stir you from options you can’t afford. To do that, list your current income, monthly dues, and home expenses to outline the percentage you can allocate for a townhouse.
The down payment is one of many things to consider when making your budget. Think about the money you should set aside for property taxes, home association fees, and the maintenance you might need. Having a good idea of your budget makes it easier to create a list of potential townhouses you can buy.
Credit Score
Your credit score will be useful in determining your financing alternatives because lenders use it to decide the conditions and interest rates of your loan, among other things. Lower credit scores correspond to more expensive mortgages because the lower interest rate you are eligible for decreases with your credit score.
Once a year, you are entitled to a free credit report and score from each of the three major credit reporting companies: Equifax, Experian, and TransUnion. You may be able to access your credit score or report for free from your bank or credit card provider as well. Get in touch with each agency and let them know if you find any differences.
Down Payment
You must put down a down payment equal to at least 20% of the home’s purchase price to avoid paying private mortgage insurance, or PMI. Mortgages without PMI are sometimes available from lenders with lesser down payments but be prepared to pay a higher interest rate. Do your homework before making a decision.
Several loans have considerably smaller minimum down payments, and many government programs exist to assist qualifying purchasers with the expense of their down payment. Based on how much you can afford to pay upfront, carefully compare prices.
Pre-approvals and Lending Check-In
Even if you only qualify for one form of loan, shop around while looking for a pre-approval or a mortgage rather than feeling obligated to stick with your present bank. Depending on whether you’re applying for the loan through a major bank, credit union, mortgage banker, or broker, the fees for a loan may vary. Mortgage interest rates change, and they have a big impact on the overall cost of your property.
The lender will review all of your financial information once you’ve selected one and completed an application. They could give borrowers a pre-approval for a certain amount. Be aware that even if you have been pre-approved for a mortgage, your loan could be terminated at the last minute. This is possible if you do any actions that could lower your credit score, such as financing a car purchase.
Making an Offer
Before making an offer, go over your budget one more time. The estimated cost of a closing deal is usually 2% to 5% of the overall purchase price. Your commute expense and any immediate repairs or appliances required before you can move in should also be considered.
Make a Visit and Inspect
Inspecting a townhouse gives a general idea of the property’s state and highlights any potential mechanical or structural problems. If significant issues are discovered, you could want to request repairs from the seller, or you might even opt to back out of the sale. This will help you decide how to proceed with the closing process.
Plan the visit right before the deal closes. Ensure that everything was completed as agreed upon and that the house is suitable for occupancy by bringing your inspection checklist and other paperwork, such as repair invoices and receipts.
Close the Deal
You should be prepared to close the deal if you can agree with the seller. Or, even better, if the inspection turned up no major issues. In essence, closing means signing documents.
The lender will send you a closing disclosure three working days before your closing date. This includes information about your loan, including the monthly payment, interest rate, loan costs, and the amount of money you must bring to closing. Depending on the trust company’s policies, this is also when you should wire your down payment and closing charges.
Make Your Dream a Reality: Townhouses for a Happier Life
Buying your dream townhouse isn’t impossible, no matter how hard it may seem. You only need patience and knowledge to streamline the process for an easier purchase. With the information in this guide in mind, your future townhouse is already a few steps away! So, what are you waiting for? Have fun looking for your townhouse and make lots of memories in it!
