HOME BUYER'S GUIDE

( PREPARING TO BUY A HOME )

Trying to figure out if you're ready to make the financial commitment of buying a home

Buying a home is a major investment, so before you start looking for a home and comparing mortgage rates, think about your current circumstances and how they might change in the future.

Consider the following questions:

    • Are you planning any significant life changes in the next several years, such as moving employment or starting a family, that could affect your financial situation?

    • Is it possible for you to commit to living in a home for at least five years?

    • Do you have a steady source of income?

    • Are you confident in your ability to handle house repairs (or eager to learn), or are you willing to pay a professional when something goes wrong?

Each option offers its advantages, so think about what's important to you.

5-Mar-29-2022-09-37-56-62-PM
6-Mar-29-2022-09-38-15-20-PM

How to Assess Your Financial Situation Before Purchasing a Home

Buying a home is likely to be one of the most significant investments you'll ever make, so be sure your financial house is in line first. To handle how much money you're making and spending each month, start by analyzing your bank accounts and billing records. If you plan to buy a house with someone else (such as your husband), look through their finances as well, and then ask yourself the following questions:

    • Do you have a steady source of income or employment?

    • Are you able to set aside money in a savings account each month?

    • Do you have a strategy to deal with debt, such as student loans and auto payments?

    • Do you have a habit of paying off your credit card debt quickly? Maintaining a modest credit debt load will assist you in obtaining a better mortgage.

    • Do you have any money set aside for a rainy day? Three months' worth of income is a good rule of thumb.

    • Have you set aside funds for a down payment and closing costs? If you use your emergency reserves for this, you may find yourself in a difficult situation.

Choosing the Amount of Your Down Payment

The amount of a down payment required varies on the type of loan and the cost of the home, but the larger the down payment, the lower your monthly payment and the more money you'll save on interest. A down payment of at least 5% of the purchase price requires for conventional loans. FHA loans only require a 3.5 percent down payment.
You'll have to pay closing costs, which are fees involved with completing and securing your loan and your down payment. These can vary according to the house price and the type of mortgage, but they often range between 2% and 5% of the home's value.