Buying a home can be a daunting task. The challenges of being a first-time homeowner can be intimidating, particularly for people who are moving away from home. Let’s take a look at a few guidelines to help take some of the stress out of the decision.
The house you buy may not be forever. Because of the soundness of real estate as an investment, many first-time home buyers tend to want to get the biggest house they can. They may be trying to start families or getting more space for their existing family to grow. Whatever the motivation, buying a house is one of the few times when people try to plan their lives 30 or more years down the road. Look for a house that suits your immediate needs and understand that every place is adaptable to a degree. A den or an office can become a nursery, a shed can become a workshop, and a basement storage area can become another bedroom. Don’t think you need to plan your life out forever if you choose to buy a home. Make some reasonable, educated guesses about what your life will be like for the next 10 years or so, and buy the house you need for that time.
Don’t become “house poor”. Many first-time home buyers also fall into the trap of figuring out the most that they could afford to spend on a new home, then spending exactly that amount. That’s sound reasoning, but only to a point. People who end up spending most of their monthly income on a house payment leave little for other debt repayment, retirement savings or building an emergency fund. They find themselves unprepared for an unexpected medical bill or car repair. Avoid this trap with a little financial consultation. Understand that your upper limit for housing expenses should only be a worst-case scenario. Buy the house you need, not the most expensive house you can afford. You’ll be happier in your home and in your budget.
Understand the process. There are a lot of factors that go into obtaining a mortgage. You can help this process by buying a house you can afford, building your credit score by reducing the amount of credit you’re using, staying with the same employer and saving for a significant down payment. You should aim to have between 3% to 20% of the total amount of the sale for a down payment, depending on your loan program and private mortgage insurance (PMI).
Don’t go it alone. A lot of big national lending institutions advertise appealing mortgage specials on billboards, TV and the radio. The rates may seem reasonable and even enticing. In reality, though, those rates go only to a small percentage of borrowers – borrowers who have exceptional credit, significant income and a considerable net worth. Given the difficulty of shopping around, make your first stop the institution that has the best chance of giving you the best rates from the start. Horizon Credit Union is there to help you secure your first home loan. Make a call and speak to a credit union representative about mortgage rates.
HOME BUYER E COURSE