Are You Ready To Buy Your First House?
First off, here’s a big CONGRATULATIONS if you’re thinking it’s time to buy your first house! Whether you're tired of the ever-increasing rent, need a place for your pet to run, starting a new job in a new city, or starting a family, there's a little homework that you need to do before you buy.
1. Consider how long you'll want to live there.
One of the most important things to consider is how long you plan on staying in the house. If you know you’ll not be there at least two years, it’s probably not the right time for you to buy.
2. Get pre-approved before you shop.
There is a shortage of houses for sale, so by being pre-approved you may have the upper hand when putting in an offer for a house because the buyer will know that you’re serious.
3. Determine how much you can afford...seriously.
What payment fits in your budget? You should have a good idea what you would like your monthly payment to be. You may qualify for WAY more than you thought, but consider all the costs of homeownership. If you buy at the top of your budget you may not have the funds you need when a household emergency arises.
4. Speaking of costs….
When you rent and the furnace breaks, you call the landlord. If it breaks in your new home…it’s on you. Some costs that you should consider when buying a house are property taxes, home owner’s insurance, age of the home (older appliances/heating & cooling, plumbing, electrical might start needing repairs), general maintenance and upkeep, lawn mowing/snow removal. These things all add up so make sure that you include this into your budget.
5. Save, save, save!!
You can get into a house with as little as 3% down. However, the more you can put down, the better. It’ll lower your amount to finance and lower your cost of the PMI (private mortgage insurance). PMI is a costly insurance that protects the lender if you default on your mortgage and is required for mortgages without a 20% down payment. Depending on the amount of your loan, this could cost you an additional $150 or more per month (the more you put down, the less this will be.) This insurance is usually required until you pay down your mortgage under 80% of the value of the home. It could take up to 10 years to get it paid down to this point!
6. Get the inspection!
Some lenders do not require an inspection but it’s worth every dollar that you spend. Unlike an appraiser, an inspector will check all the systems in the house, electrical, plumbing, heating / cooling, roof and foundation. If there are problems with any of these you would definitely want to know before buying the house.
The thought of buying your first home might make you anxious, but if you do your homework and are prepared, it can be a fabulous experience.
Written by: Patty Long, Mortgage Loan Officer