Know what you can afford
When buying a home, it’s important not to bite off more than you can chew. Easier said than done when there are so many numbers to take into account, from down payments to mortgage rates to yearly income to savings interest. For many of us, especially those for whom math isn’t a strong suit, it can be overwhelming.
Traditional wisdom suggests that your regular house payments (including mortgage, utilities, maintenance, and taxes) shouldn’t exceed 28% of your monthly income. If that seems like a lot of numbers to juggle, using a house payment calculator can be a big help. By comparing how much you make with how much you’ll need to spend (not just on house payments but also general living expenses), a house payment calculator can help you figure out how much house you can currently afford, or what kind of lifestyle changes you might need to make in order to save up for the house of your dreams. One way to save money keep up with regular maintenance. This includes everything from routinely inspecting your garden fence to scheduling regular HVAC inspections. You could try Sirius Plumbing and Air Conditioning, or a similar company, to help you keep on top of your HVAC maintenance.
Know the different kinds of loans
It used to be a rule of thumb that if you wanted to buy a house you’d need to pay a down payment of 20% the sales price. You may have heard people swear by this as if it were scripture. However, while 20% down payments may still be common, and even recommended if you can afford them, they’re not the only game in town. These days, there are a variety of loan types available to meet any borrower’s needs.
Many lenders are willing to offer mortgages with down payments as low as 3% if the borrower agrees to get private mortgage insurance. Other loan types that go as low as 3% include Conventional 97 loans, which are for borrowers buying single-unit homes, and Homeready loans, which take into account the income of all members of a household instead of just the buyer. FHA loans offer 3.5% down payments for those with a credit score of at least 580. USDA and VA loans, meanwhile, require no down payment at all, provided the borrower is buying a home in an eligible rural area (USDA) or is a member of the armed forces (VA).
Know all the hidden costs
Among the many deep and slippery pitfalls that threaten every first-time home buyer, none come as quite a shock quite as all those secret costs that no one tells you about. And there are quite a few of them. Buying a house costs more than, well, the price of a house. Before and after the purchase is complete, there are a whole host of other hidden expenses to be mindful of.
The first surprise you might run into comes in the form of closing costs. These include everything from lender application fees to title searches to appraisal costs and more. Then there’s the required home inspections (which typically include foundation, plumbing, electrical, heating, and termite inspections, at the least). Plus any necessary repairs that those inspections unearth. Not to mention any and all future repairs, renovations, and general home maintenance. Homeowners insurance isn’t always required but it is always very, very recommended. Last but not least, your utility bills will be a lot more expensive than you may be used to.