If you are about to embark on the exciting adventure of the first home buying experience, you are likely anxious and terrified too. This is one of the biggest decisions you get to make in life.
While it may tempt you to make a snap decision at some point because house hunting can be a lot of fun. And the thought of moving in right away into a new place that is better than what you have currently is pulling you in like a magnet. Don’t do it!
Take it easy when buying your first home. You want to do it the right way so that you don’t have regrets after you move in.
We’ve got some home buying advice we think you should read before coming to any conclusions. Let’s get started.
First Home Buying Is Expensive
Okay, let’s talk about money. Buying a home is more expensive than renting.
Don’t let it fool you if your monthly mortgage payment appears to be less than your current monthly rent, because when you own a home, the monthly fees are more than just the house payment. There is maintenance and the cost for upkeep. These additional expenses add up quickly.
Before you sign off on the purchase of a new home, you want to be debt-free. You also want an emergency fund, preferably one that can carry you for three to six months worth of bills.
How Much Can You Afford?
The last thing you want to do is fall in love with a wonderful house that you simply cannot afford. Before you shop around, determine your budget for buying a home.
It’s not just the mortgage, but other fees you need to add into your total cost for monthly housing. You will need to add taxes, insurance, HOA fees, and anything else that may be a part of it. You want the total monthly payment to be less than 25% of your take-home pay.
Down Payment for Buying a Home
It may not be a reasonable ask of you to save the money for the total amount of buying your first home. You should save at least 20% of the value of the home for a down payment.
When you put down 20%, you avoid paying PMI or Private Mortgage Insurance. PMI protects the mortgage company if should you miss your payments and result in foreclosure.
PMI is typically one percent of the total loan amount. This can add up fast as they will charge you the one percent PMI every year.
Closing Cost for First Time Home Buyer
Besides, the down payment is the closing costs. Buying your first home will mean you will pay about three to four percent of the home’s purchase price for closing costs.
You will know the exact amount by closing day. The closing costs include home inspection, homeowner’s insurance, appraisal, attorney, and credit report.
A Few More Tidbits
First home buying has a lot to consider. One thing you want to add to the list is to vet out at least three mortgage lenders so that you know you have the lowest rate. Many first-time homebuyers pay too much in mortgage because they don’t take this step.
You should also vet out the different types of loans you can get. There are dozens out there, but most people are in one of four major loan programs:
You want to choose what is best for you, whether it is for a low credit score, low down payment, large loan size, etc.
Next, for home buying advice, you want to ensure that before you begin house hunting; you have a pre-approval from the mortgage company. This will verify your budget for the seller. They may not accept your offer if you don’t have it.
Last, you’ll want to ask for an ACH transfer timeline.
We Hope You Enjoyed This Quick Home Buyers Guide!
First home buying is awesome if you follow the process we outlined for you in this article. We are always offering you timely advice to help you on life’s journey.
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