Owning a home is a big responsibility and isn’t something to be taken lightly. It requires serious thought about whether or not you are ready for a commitment of this magnitude. Making the decision to take the plunge into home ownership is both scary and exciting. If you’ve decided to buy a home, here are a few tips to help guide you on your way to become the most successful homeowner possible.
Know what you can comfortably afford
The first thing to keep in mind is that your new home shouldn’t be one you can’t afford. Before you do anything else, review your finances and check your credit score. It’s important to understand what lenders will see when they review you for a loan and find ways you can improve financially. While you’re at it, figure out how much you’re comfortable paying each month. (Be sure to consider the principal, interest, property taxes, homeowner’s insurance and private mortgage insurance.) This will help make sure you are prepared to assume the cost of your new home and have enough of a financial “cushion” to enjoy living in it.
Estimate upfront costs
Depending on the loan program you select, you may be required to provide a down payment. Anything less than 20% will usually require private mortgage insurance (PMI) to protect the lender in case you default on the loan. But that’s not the end of it; there are other upfront costs that you may be responsible for. You may need to pay closing costs, moving costs, home maintenance, or other expenses. Be sure you have properly saved for this.
Choose the right loan for you
Many loans are available for home buyers. The two most common types of mortgage loans are fixed rate mortgages (FRM) and adjustable rate mortgages (ARM). The fixed rate mortgage will require you to pay a consistent payment over the entire loan term. An adjustable rate mortgage means your payments can vary based on the movement of interest rates. Contact a loan officer to get details about the types of loans that may be best for you.
And understanding the loan process
It’s recommended that you get pre-qualified for a loan prior to house hunting. Not only does this allow you to get an idea of what you can comfortably afford, but it also helps show sellers that you’re a serious buyer. Once you’ve found a home and are ready to actually apply for a loan make sure you have a signed purchase contract, W-2s for the past two years, and income and employment records. Ask the mortgage specialist if they require any additional documents and make sure to also bring those when you go to apply. You should periodically check on the progress of your loan and, as closing day approaches, check to make sure you have all the necessary items.
Congratulations on making the decision to purchase a home! Take these few steps and you will be on your way to becoming a successful homeowner!
Christine is the Content Marketing Coordinator for Homes.com. She's a small town girl at heart, who currently lives in Norfolk, VA with her husband and their fur baby. When she's not working, she enjoys cooking, decorating, traveling, and binge watching Netflix. As a proud Virginia Tech alum, she also loves cheering on the Hokies!
