Posted on: 22 October 2017
The occasion of becoming a first-time homeowner is exciting, but if you fail to do some important prep work ahead of time it could end up being a less than happy experience. If you are on the search for the home of your dreams, read on to ensure that you are ready to take on this important responsibility by following these tips.
Save up for a down payment, and begin early.
Socking away even small amounts can add up, so begin early and budget for about 20% of the cost of the home. For example, a $150.000 home would require a down payment of about $30,000. If this seems like a large sum, it is, and there is the distinct possibility that you won't have to come up with quite that much. The potential amount of any down payment depends on your credit rating, income, purchase price and type of loan. You can count on one thing, however, if you cannot make an adequate down payment you will need to pay an additional sum of money every month for private mortgage insurance (PMI).
Shop around for a mortgage and lender
Even a small difference in interest rates can cost you, or save you, thousands of dollars over the life of a loan. Compare interest rates and points carefully, and speak to several lenders before you make your decision. In most cases, the lender will offer you a preliminary approval and a locked-in interest that will expire in a few months.
Decide what to prioritize
No home is perfect, but some things mean a lot more than others. Make a list of "drop dead" features you must have, such as school zones or number of bedrooms and be ready to compromise on other things. Don't get desperate and distracted by real estate chatter about the market, this is likely to be one of the most expensive things you ever buy, and you must take your time as you approach this purchase. Decide exactly what you want, and be prepared to make a quick decision when you find it.
Be financially prepared for your new home
There's more to being a homeowner than coming up with the down payment, closing costs and loan approval. When you buy a home, that is only the beginning of financial responsibilities. Take some time to learn about what it costs to have expensive system components repaired or replaced, and put that money aside. After all, the days of calling the landlord when the plumbing springs a leak are over with, you are now the one responsible.Share