Buying your first home is a huge decision. At Shirley Adams Financial we want to help make the process as Hassle Free as possible. To help ease the anxiety, we want to provide you with a few tips.
- Make a plan. Making sure your future monthly mortgage payments will be the most important part of homeownership, so decide on a monthly home payment that you are comfortable with. Be sure to Include PITI (principal, interest, taxes, insurance and homeowners association dues [if any]) in your calculation. Utilize our mortgage calculator to see how much you will pay monthly for principal, interest and mortgage insurance [if any]. Remember, you will have to pay property taxes and homeowners insurance as well. Depending on your loan program, this may be paid in installments alongside your PIMI [principal, interest & mortgage insurance]. Consult one of our qualified loan officer for more information on this.
- Manage your credit. Utilize credit wisely. Carrying too much debt can become overwhelming and should anything unexpected happen, this could lead to missed mortgage payments. It’s important not to overextend your credit cards and other debts so you stay current on all your payments. When you decide to start looking for a home, check your credit report and credit score with any of the 3 major credit reporting agencies: Experian, TransUnion and Equifax. If you find any mistakes that need to be corrected, addressing these issues early will put you in a better position.
- Be prepared, know your cash to close. Your deposit DOES NOT include closing costs. To purchase a home you will need cash for a down payment and cash for closing costs (see closing costs estimator). The down payment ranges from 3% to 20% or more. Less than 20% down or if your loan if financed through the FHA, you will be required to pay for private mortgage insurance. Closing costs range 3-7% of the total loan amount and will include charges such as loan origination fees, title insurance and appraisal fees etc.
- Research mortgage options. As a first-time homebuyer, you’re anxious and at the same time, excited about owning your first home, but do the research and learn the differences between the various types of mortgage so you’ll know which one is best for you.
- Get prequalified. Knowing how much you can borrow will let you keep your search focused on the homes that are right for you. Getting pre-approved (Apply now) will provide you with an estimate of how much you can borrow.
- Research your utilities. Consider if you are moving into a larger home than you’re used to, a home that is newer or older than you’re used to or relocating to a state with a climate that’s hotter or colder, your monthly utilities will not be the same as you are used to. Be sure to ask your real estate professional to find out what the average energy bills have typically been. This will help prevent being surprised by a higher utility bill than you’re expecting. If you’re moving into a new community, find out the range for property taxes of other homes that have closed prior.
- Don’t forget miscellaneous expenses. Be sure to budget for moving expenses and additional maintenance costs. Keep in mind that you should have an emergency fund on hand to prepare for any unexpected changes in your income (like reduction in your wages) or unexpected expenses (like medical bills).
Still have questions or need to speak with a mortgage specialist?
