Here's Barbara Corcoran's Best Advice for Home Buyers

by Maurie Backman | Published on Aug. 21, 2021

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Need home-buying advice? It pays to get it from a true expert.

Shark Tank personality Barbara Corcoran is often hailed as a shrewd investor. But if there's one thing she knows well, it's real estate. As the founder of the renowned Corcoran Group real estate firm, Corcoran is a great person to turn to for home-buying advice. Here are three of her best tips.

1. Know your credit score

What does your credit score have to do with buying a home? A lot -- the higher your score, the more likely you are to snag a competitive interest rate on a mortgage.

If your score isn't great, it could pay to put your buying plans on hold and work on boosting it. First, pay all incoming bills on time. Next, if possible, pay off any credit card debt -- using less of your available balance helps your score. Finally, check your credit report for errors, as certain mistakes (like delinquent debts that aren't yours) could drag your score down.

2. Don't spend more than 30% of your income on housing

Corcoran and other experts say it's good to keep your housing costs at or under 30% of your take-home pay. That way, you won't overextend, and are less likely to fall behind on your bills.

In this context, "housing costs" doesn't just mean a mortgage payment. Rather, that figure should include all predictable monthly housing costs you're responsible for.

Those include:

  • Property taxes
  • Homeowners insurance
  • HOA fees (if you're buying a home that's part of a homeowners association)
  • Private mortgage insurance (which you pay if you take out a conventional mortgage and make less than a 20% down payment on your home)

If you're not sure what you can afford, use a mortgage calculator to run the numbers before you look at homes. Input different down payment and home price amounts to get a good sense of what type of property you can swing.

3. Don't forget about closing costs

It costs money to finalize a mortgage. You pay appraisal fees, recording fees (so that your mortgage becomes public record), and other fees known collectively as closing costs. Generally, closing costs amount to 2% to 5% of your loan amount. If you take out a $300,000 mortgage, you may pay $6,000 to $15,000 to finalize that loan.

Most lenders let you roll your closing costs into your mortgage and pay them off over time, but that adds to your monthly payments. You may want to bring a check for those fees to your closing, if you can swing it.

Buying a home is a big step -- one to approach strategically. So follow these expert tips from Barbara Corcoran, and they could help steer you in the right direction.

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