Owning Your First Home Is A Big One

Owning Your First Home Is A Big One

5 Things To Know Before Owning Your First Home

Congratulations! If you are in the preliminary processes of becoming a first-time homeowner – you should be proud. The amount of planning it has taken you up until this milestone is profound. While we have you here – we’d like to make this adventure as easy and seamless as possible. Before you take the plunge, here are some pieces of sound advice you should take before owning your first home.

Get your debts in order

Owning is a whole different ballgame than renting and condo living. You are responsible for all upkeep and maintenance. It is highly recommended that you get your ducks in a row and wipe out any debts you may have accumulated. In addition to debt maintenance – you should create a buffer of three to six months of expenses. This way if a pipe bursts or your ceiling leaks, you’re covered.

Be realistic with your budget

You should definitely take your monthly budget into account. A home, including insurance & fees should be no more than 25% of your monthly take home income. Before owning your first home, be realistic with what you can really afford. We suggest keeping those open house visits to homes that work with your budget, because seeing a home you cannot afford and falling in love with it poses devastating consequences.

Do make a down payment

There aren’t many people who can pay for an entire house with cash up front. So, if you’re a part of the real world like us, we suggest considering the option of putting down 20%. This could alleviate you from requiring Private Mortgage Insurance (PMI). PMI protects mortgage firms if there are issues with making payments. It makes sense that the more you can put down, the quicker you can pay off your mortgage.

What are closing costs?

It’s crucial to consider that with purchasing a home, you’re not only responsible for a reasonable down payment – but closing costs as well. These are fees that are necessary for kick starting your initial buying process – including home inspection, credit report, attorneys, appraisals & more. These fees usually go for about 3-4% of the price of your home. This is why it’s smart to plan ahead and remain within your budget, because there will always be extras.

It’s preapproved loan time

If we did our math correctly, your down payment and closing costs aside – you still need roughly 80% coverage. Getting a preapproved loan puts you on a different platform than other hopeful homeowners. Mortgage lenders would need to verify your income, taxes and any other pertinent financial information. However, this preapproved status shows the seller that you mean business and are responsible to take on the seriousness of owning a home.

Time to make an offer

Our advice – be competitive but be smart. Once again, we’re talking about your budget. Falling in love with a home and being impulsive tends to be a bad combination. Your real estate agent will be your guiding light when it’s time to make your offer. If you want to stand out to the seller – writing a letter usually does the trick to make your offer shine.

This milestone is a big one – and because this purchase is probably going to be one of the largest you’ll ever make – do your homework. It isn’t something that can be accomplished overnight, so if becoming a homeowner is in your near future, start making some plans and paying off your debt to ensure you’re the best candidate possible. Contact Tobin & Collins to help get your financial picture as perfect as can be!