Home Buying

Home Buying Articles

The Ultimate Philadelphia Row House Guide

Some of the most unique, historic and beautiful row houses are located in charming Philadelphia. Learn about the unique row houses in each Philly Neighborhood!

How Soon Can You Tap into Home Equity?

Wondering whether you can or should borrow against your home? These are the top factors you need to consider if you’re deciding to tap into your home equity.

Can I ask my contractor these questions?

You’re not the only one wondering what is and is not ok to ask your contractor. Check out these acceptable and smart questions.

How much will your home value increase in 2022?

With record home prices in 2021, how much more will home prices increase in 2022? Well, it depends on where you live.

Prioritizing new house projects: where to start?

Read our guide to learn which home remodel projects make the most sense to do first after buying a new home - and why.

Home Buying Articles Continued...

Projecting the value of homes in the U.S. in 2030 and analyzing the impact of COVID-19

We’re doing a deep dive into the projections of how much it could cost to buy a home across the US by 2030, as well as the impact that COVID-19 has …

Top tips for dealing with a shady contractor

Tips to help you get through your reno with your sanity and bank account intact.

First Time Home Buyer

Buying a Home for the First Time: What You Need to Know

Buying a home for the first time involves several steps. Find out everything you need to know, including financing options.

An Expert Guide To Everything You Need To Know About Curb Appeal Renovations

The outside of your home is the first thing people see and the biggest thing they’ll remember. Curb appeal is an easy way to add value to your home. Learn the top ways to improve your curb appeal!

2021 Top U.S. "livable" suburbs

RenoFi’s latest research reveals the most perfect places in the United States for your forever home.

6 dumbest things homeowners do when paying for a renovation

You’ll have a lot of decisions to make during your home renovation—how to pay for it is probably the biggest.

Complete the Home Buying Checklist

To prepare beforehand, it’s wise to scrutinize your finances before the bank does. Here are some important aspects to review:

Credit Score

Checking credit scores and reports before applying for a mortgage is a good idea. Lenders use these to determine the type of mortgage you might qualify for, if any. Credit scores range from 300 to 850, with scores above 760 generally securing the best terms and rates.

Scores below 500 often make mortgage approval difficult. Alternatively, while FHA and VA home loans are more flexible with credit scores, they come with other requirements.

If someone with a low credit score still gets a mortgage, they might face higher fees and interest rates. So, waiting until some debts are paid off could be helpful before initiating the process. Improving a credit score is also possible by using a credit card responsibly and paying off the balance in full each month.

Income and Savings

When assessing your financial situation, a lender typically looks at two key factors: your income and savings. They want to be sure you have a steady and reliable income to comfortably manage monthly payments and other expenses. Savings also play a big role, especially when you are buying a fixer-upper or planning major renovations.

Income and Savings Considerations

• Consistency and Stability: You should be able to show income from reliable sources, such as a salaried job or long-term self-employment. The length of employment or a consistent work history is also important.
• Verifiable Income Sources: You should be able to show proof of income through pay stubs, tax returns, W-2 forms, or 1099s.
• Cash Reserves: Lenders often ask for proof of savings to show you have sufficient cash to cover loan payments in the case of emergencies (typically 3-6 months).

DTI Ratio

In addition to checking your credit history, mortgage lenders also look at your debt-to-income ratio (DTI). To calculate DTI, divide your monthly debt payments by your monthly income.

A DTI above 40% can make it harder to get approval and may lead to higher rates. Keeping your DTI below 40% can help with mortgage approval and provide flexibility for unplanned renovation costs.

Set Your Budget

It’s essential to determine what you can afford—not just the upfront payment but also the ongoing monthly mortgage payments. You can do this by preparing a monthly budget.

Consider a Fixer-Upper

When you’re searching for a home, you might find that new or move-in-ready options are beyond your budget due to price appreciation and rising home prices.

Find a Local Real Estate Agent

A local real estate agent can help you find homes that fit your needs and budget, including potential fixer-uppers. They’ll guide you through listings and help you understand the renovation potential of different properties.

Prepare the Required Documents

Here’s a list of documents that will likely be requested:

• Tax Documents: Include your past two years of tax returns.
• Proof of Income: Provide a month’s worth of paycheck stubs or other income records.
• Bank Statements: Submit statements from the last 60 days.
• Loan Papers: Include documents for any existing debts.
• Rental Payment History and References: Provide information about your rental history for the past two years.

Find a Mortgage Lender and Get Pre-Approved

Speaking with mortgage lenders early in the home-buying process is a smart move. It helps get an idea of the available mortgage options and provides the opportunity to learn about terms, fees, and interest rates associated with the loan.

Begin Your Home Search

With your buyer’s agent by your side and your pre-approval letter ready, it’s time to start looking at homes. Buying a home is a big decision, so take your time viewing homes to ensure you’re confident and feel satisfied with them later.

Make an Offer and Negotiate

Once you’ve chosen your home, it’s time to make an offer. If you’re considering a fixer-upper, keep renovation costs in mind to ensure the total cost remains within your budget.

Pay Earnest Money

Be ready to include a money order or check with your offer to show you’re committed to the deal.

Finalize Your Financing

Once the price is settled and the contract is signed, the next step is the mortgage application. Be prepared to submit the documents you’ve gathered.

Order a Home Inspection and Appraisal

Now is the time to schedule a general home inspection with a licensed professional.

Closing

Closing on a house is the exciting final step in your home-buying journey. During this phase, you’ll sign the necessary legal documents, settle closing costs, and finally receive the keys to your new home.

Renovating Your Home With RenoFi

Buying a new home is a big milestone, and having a home-buying checklist can make the process smoother and more manageable. Alongside having a solid checklist, choosing the proper financing method is another pivotal decision, especially when there are major home renovations you want to complete.

What sets RenoFi Loans apart is that they’re based on your home’s value after renovations, not just its current worth. Unlike traditional loans, RenoFi Loans are based on your home’s after-renovation value. This means you can borrow up to 11 times more and enjoy lower monthly payments—all while keeping your existing low rate!

RenoFi is the smart choice for financing your renovation. It maximizes your borrowing power and keeps your mortgage terms intact.