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How Much Can I Afford to Spend on a New Home?
This is a very important question. Many first time home buyers forget that there are other costs associated with owning a home outside of your mortgage payment. Sometimes, what you can be approved for is more then you're willing to add to your monthly budget.
This is a very important question. Many first time home buyers forget that there are other costs associated with owning a home outside of your mortgage payment. Sometimes, what you can be approved for is more then you're willing to add to your monthly budget.
How Much Do I Need For My Down Payment?
If you have ever asked your parents or grandparents about buying a home, they most likely told you that you should put a minimum 20% down payment. It's good advice and a great way to avoid paying costly private mortgage insurance, but it's no longer a requirement. There are mortgage products that now allow as little as a 3.5% down payment which means you can afford a little larger home because you can finance more of the costs instead of paying it out of your savings.
If you have ever asked your parents or grandparents about buying a home, they most likely told you that you should put a minimum 20% down payment. It's good advice and a great way to avoid paying costly private mortgage insurance, but it's no longer a requirement. There are mortgage products that now allow as little as a 3.5% down payment which means you can afford a little larger home because you can finance more of the costs instead of paying it out of your savings.
Other Costs Associated With Home Ownership
While you are trying to decide on a budget for your new home, it's very important to factor in the other costs that do not appear in your monthly mortgage payment. Some things that you will want to consider are:
While you are trying to decide on a budget for your new home, it's very important to factor in the other costs that do not appear in your monthly mortgage payment. Some things that you will want to consider are:
- Monthly maintenance to the home
- Surprise repairs that need to be made
- Monthly utilities like electricity, water, sewer, heating and cooling, and trash pick-up
- Any new furniture for the home
- New appliances like a refrigerator, stove, or washer and dryer
Getting a Pre-Approval
Obtaining a pre-approval is the best way to find out the price range of homes you should be searching through. This prevents you from wasting your time by looking at homes that fall outside of your price range. Also once you have found the home you want to make an offer on you can include your pre-approval letter with your offer and the sellers will know they are dealing with a buyer that means business.
Pre-Approvals are not a 100% guarantee that you can get the financing needed for a particular home. There are a number of problems that can cause a problem like an unsatisfactory title or appraisal.
Obtaining a pre-approval is the best way to find out the price range of homes you should be searching through. This prevents you from wasting your time by looking at homes that fall outside of your price range. Also once you have found the home you want to make an offer on you can include your pre-approval letter with your offer and the sellers will know they are dealing with a buyer that means business.
Pre-Approvals are not a 100% guarantee that you can get the financing needed for a particular home. There are a number of problems that can cause a problem like an unsatisfactory title or appraisal.
Buyers With Less Then Perfect Credit*
If you have less then perfect credit*, it's still possible to get approved for a home loan. You should be aware that you may have to pay higher interest rate to offset the risk taken by the lender. Another option is to try and improve your credit before applying for a mortgage.
* Subject to limitations, this does not constitute or otherwise imply an offer of credit.
If you have less then perfect credit*, it's still possible to get approved for a home loan. You should be aware that you may have to pay higher interest rate to offset the risk taken by the lender. Another option is to try and improve your credit before applying for a mortgage.
* Subject to limitations, this does not constitute or otherwise imply an offer of credit.
Conclusion
No one will ever say that owning a home is an easy venture. There are many ways to prepare yourself and make sure that you are not getting in over your head. If you have lots of questions please don't hesitate to call us. It's our job to make sure your ready to enter home ownership.
No one will ever say that owning a home is an easy venture. There are many ways to prepare yourself and make sure that you are not getting in over your head. If you have lots of questions please don't hesitate to call us. It's our job to make sure your ready to enter home ownership.
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Very friendly and was better than we expected. |
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