Financial considerations for buying a home
This is an exciting time but also an enormous responsibility. You'll need to research to find the right home and get the best mortgage possible. Here's a quick guide to help you through the process.
How Much Can You Afford?
The first step is to figure out how much house you can afford. This depends on your income, debt, credit score, and other factors. Your mortgage payment should be no more than 28% of your monthly income if you need a home loan.
Choose a Loan Type
There are two primary mortgage types: conventional and government-backed. A conventional mortgage is available through a private lender and doesn't require government insurance. It's also available with an adjustable or fixed interest rate. If you have a 20% down payment, you may avoid having to pay for mortgage insurance.
The Federal Housing Administration and the Department of Veterans Affairs insure government-backed mortgages. These loans are available to qualified buyers and often have more relaxed credit requirements, such as a lower down payment. But they come with a mortgage insurance premium that's paid monthly and can add to your costs.
Down Payment Assistance Programs
If you're having trouble coming up with a down payment, you may be eligible for tax credits or a state or local down payment assistance program. These can provide funds to help with a down payment and closing costs. Options include loans that roll the closing costs into the mortgage or are forgiven after a certain period. Some areas offer grants for buying homes in specific neighborhoods or conditions. Eligibility for assistance may be based on your income, career, location, and home type.
Get Pre-Approved for a Mortgage
Once you know how much you can afford and what type of loan you want, get pre-approved for a mortgage. This means submitting your financial information to a lender and having them provide you with an estimate of how much they're willing to lend you. Pre-approval gives you a better idea of your future interest rate and monthly payments.
Choose a Real Estate Agent
When you're ready to look at homes, choose a real estate agent. They help you find listings, schedule showings, and negotiate with sellers. The real estate professionals at BRC Real Estate are experienced and knowledgeable and offer superior service.
Making an Offer
Once you've found the right home, make an offer. Your real estate agent helps you determine an appropriate amount based on the list price, recent sales of similar homes in the area, and any repairs that need to be made. Always have a home inspection done before finalizing the sale.
Consider a Home Warranty
Even with a full inspection, consider a home warranty. This covers the cost of repairing or replacing major systems and appliances if they break during the first year after you close on the home. To see if a warranty is worth it, review the inspection report to help determine any appliance repairs you may need to make in the first few years of ownership.
Buy a Home
Buying a new home is exciting. It can be a quick and low-stress process with the right tools. Figure out what you can afford, select a loan type, get pre-approved, get an offer, and consider investing in a home warranty.. To get the process started, contact BRC Real Estate today!
ARTICLE SUBMITTED BY: Kelsey Higgins, Remodel-expert.com
