Are you debating buying your first home? If so, I have a few tips for you. You want to be sure you can afford a new home before you start the process. Here are a few questions to ask yourself:
- Can I make at least a 10% down payment? (20% is even better)
- Can I afford a 15-year fixed rate loan?
- Can I keep the house payments at or below 25% of my monthly take-home pay?
If you answered “yes” to all of the above, you may be ready! Your next step is to get pre approved for a mortgage. Do some research and find a trusted mortgage company in your town. You will need to request a good-faith estimate breakdown. This will include an estimate of your interest rate and payment. Now, you can use this estimate to compare with other companies in your area to get the best rate! You can actually save thousands by comparing loans from different banks. DO NOT ACCEPT your first offer-shop around!!
Be sure to keep in mind that there will be extra expenses once you purchase your home. Many people get so excited about getting into their own home, that they tend to forget about all of the costs that come with home ownership.
A few extra expenses to keep in mind are: Property Taxes, Utilities, Insurance, Home Repairs.
Property taxes can sometimes add hundreds of dollars to your payment. Utilities will depend on the size of your home and if you have a well or city water, etc. You will need good homeowners insurance to guard against loss from fire, storms, water damage, and more. Home repairs can be needed at anytime. Always plan ahead for these types of expenses.
Also check out this great article: 10 Things Open Houses Won’t Tell You
Guest Post by Genworth Financial