Are you ready to make the leap from renting to owning your own property? Buying your first home is pretty daunting, but United Financial is here to help. There’s plenty of information to know, but follow these key tips when you buy your first home!
Before You Even Begin Searching
Surprisingly, buying your first home doesn’t begin with the search. How do you know which homes are in your budget unless you know how much home you can afford? Check out your credit score, because it will give you a good indication if you’re ready to qualify for a mortgage.
Next, you’ll need to consider:
- Your Type of Mortgage
- Down Payment
- Closing Costs
- Move-In Expenses
Choosing Your Mortgage Type
There are two main types of home loans: fixed-rate and adjustable-rate mortgages. Fixed-rate may be a better choice if you plan to stay in the home for decades since the rate and loan payments don’t change over time. But if you anticipate moving within a decade, adjustable rates could benefit you. Generally, adjustable-rate mortgages have a fixed period before rates can adjust to the market.
How much you’re required to pay upfront for your home depends on your credit, the type of mortgage you’re accepted for, and your overall budget. With good credits, down payments can be as low as 3% of the total costs, but common wisdom says you should pay 20% if you can. Any down payment that is less than 20% will require you to also get private mortgage insurance (PMI), which adds onto your monthly mortgage payment.
There are lots of other costs and fees that will be added into your mortgage contract, so it’s good to be aware of them. They include attorney & lending fees, taxes, title insurance and more.
Beyond even the costs of moving your belongings, moving tends to come with expenses like small home repairs, new furnishings, and other upgrades.
Get A Preapproval
A pre-approval letter states your lender has tentatively agreed to loan you up to a certain amount of money to purchase a home. These are incredibly handy for a few reasons. You can begin your home search knowing exactly what you can afford. Sellers will take your offers more seriously because they know you have payment lined up. Finally, it helps save time during the closing process since your lender has all of your information. Learn more about getting a preapproval letter here.
After You Pick Your Home
Once you’ve found a home you think you want to put an offer on, remember these key things!
Hire a Home Inspector
Looks can be deceiving, and nobody wants to unknowingly buy a home rife with issues. That’s where a home inspector comes in. They visit the property and inspect things like the foundation, walls, flooring, and roof to assess if the home is structurally safe and sound. Imagine going through the whole process and then discovering the home has a termite infestation! While home inspections will be another upfront cost to you, they are completely worth it.
Get Adequate Home Insurance
Even if you are paying on private mortgage insurance, you will also need to invest in homeowners insurance to cover your home and belongings in the case of accidental loss. It also provides liability insurance in case someone were to become injured on your property. Luckily, you can even shop for insurance with United Financial’s help!
Ready to Get Started?
Now that you know how to get started, we can help make it easy! United Financial can both help you access your credit score and walk you through your mortgage options! If you feel comfortable applying on your own, you can even apply online from home! Ready to make the leap to homeownership? Let’s do it together!