So, you think you’re ready to end your time as a renter and buy your first home. In the long-term, it’s an excellent choice, but when you begin investigating the short-term costs and labor involved it becomes much more complicated.
Buy your first home, and you’ll find that there is work to do to get there and responsibilities that renters never have to consider. The process of purchasing real estate can be stressful, and it takes time and energy.
Steps Into The Home Buying Process
First take a detailed look at your personal finances and check your credit reports. You will need to know your budget and whether you have the funds for a twenty percent deposit. Fortunately, there are FHA-backed loans with 3.5 percent down payments plus costs. You may qualify for even better terms if you are a veteran or serving member of the United States military.
Once you understand your budget and credit, speak to your bank about how to pre-qualify for a home loan. Pre-qualifying marks a milestone in home buying because it shows realtors, lenders, and sellers that you’re serious and, in principle, you have the capacity to purchase a home. From this point, you’re beginning the real journey of finding a home, which warrants a complete post.
The Issues When You Buy Your First Home
You have more payments to make as a homeowner. You have to make your loan payments every month; this usually includes payments toward principal, interest, property tax, and insurance. If you go FHA and make a small down payment, you’ll also pay mortgage insurance premium on the extended loan each month.
The fifth payment type is for homeowner association fees or condo fees. If you are buying into a community or building that has shared responsibilities you pay HOA fees. HOA covers the cost of maintenance, some utilities, and the property management contract. An HOA fee is a given for condos, if you are purchasing a house, you should still budget a similar amount for the cost of maintenance and repairs and set it aside each month.
Do Homeowners Have Lower Living Costs?
The magic of real estate is that every property is unique and that’s also a nuisance if you want to compare your options. Look at how much house you can afford to pay for a monthly mortgage payment for your current rent amount. You should then consider how much it would cost you in down payment and closing costs.
If you can save for a larger down payment and improve your credit score to qualify for lower interest rates on your mortgage the investment will pay off well in the long-term. In five to ten years you will accumulate equity and have a more settled lifestyle. It is expensive to get through the home buying process, and you will have responsibilities as never before, but you will also be a home owner, and that pleasure will make it worth struggling to buy your first home.