Before you buy into the ‘American Dream’ there are a lot of aspects of home buying that you need to take into account. Buying a home isn’t only an investment it is also a lifestyle purchase.
When you think about buying a home you will want to make sure it fits into the type of lifestyle that you would like. Do you want a house in the suburbs close to schools or would you rather live in a more fast paced urban area? Do you want to live near the mountains or the beach? If you work at home then you may want to make sure there is an extra room for a home office. If you dream of having a lot of dogs then make sure you get a decent backyard so they can get plenty of exercise. Before you go through the process of acquiring a home you will want to make sure you want to live in awhile so make sure it is located where you want to be and that it will fit the needs and desires of your lifestyle.
How Much can you Afford?
Once you have figured out what type of house you want and where you want it to be located then you will need to figure out how much you will be able to afford on a monthly mortgage. When you go to get a loan for your mortgage your other loans will be taken into account as well. The final cost of all your loans, including the mortgage you are applying for, should be no more than 36%. For the sake of making this simple, it means that if you made 1000 dollars a month then your payments for your car, student loans, and housing cost should come out to about 360 dollars per month.
You will also be required to have a down payment. This down payment is generally somewhere between 10 and 20 percent of the loan amount you are looking for. If you don’t have this yet, then you aren’t ready to buy a house with a traditional mortgage and should work on saving up for your down payment some more. There are also rent to own homes that you can get, however, you will want to ask around to make sure you are getting a good deal.
Extra Costs and Home Maintenance
If you have the down payment and can afford the monthly payment for your home then you will want to get home owners insurance. You can call around and find out how much this is going to cost you so that when you acquire your new home you can start your policy right away. There are also going to be costs to maintain your house and do common repairs. You will want to set aside a fund for this so that you can be at least somewhat prepared for this to happen. If you don’t take care of routine maintenance on your property the value is going to go down and you will lose money on your investment.
Since this is your first time buying a home it is a good idea to work with a broker. Brokers can prove to be a valuable source of information in this market and will help you a lot when it comes to making important decisions. They can also spot good deals that you may not have found on your own. If you’re not sure how much you can afford you can always go into your local bank and talk to them. Try to prequalify for a loan to see how much you are going to be eligible for. You can use the powers of communication to your advantage in this area because if you talk with people honestly about your situation, goals and desires, then they can help you get what you want or at least lead you down the right path to getting just that. If you aren’t financially stable enough yet to afford buying a home then don’t worry because you are not alone.
Make sure you don’t rush the process of buying your first house. Plan out what your financial moves are going to be so that you can live the ‘American Dream’ too.