Tips You Should Know Before You Buy Your First House

Posted on: 30 June 2018

Beginning the search to look for a home to buy can be exciting, but don't let the important details of the process be forgotten and fall by the wayside. Getting your financing in order and hiring a realtor are just the first steps and can help you have a successful home buying experience. Here are some financing tips to help you make this process an easier one.

You Don't Have to Have a Large Down Payment

One of the first things many people think of when they consider buying a home is the down payment they will need to have saved up for the purchase. Many years ago, a traditional loan required at least a twenty percent down payment, which meant you might have had to save up for a long time before you could get a home. On a $200,000 home, for example, you would need at least $40,000 just for the down payment. But today's mortgages offer various types of funding and programs to help you avoid having to save up a twenty percent down payment.

Mortgage companies can also offer you financing without the twenty percent down payment as long as you pay a mortgage insurance to the mortgage company until your loan is paid down a specific amount. This premium is to protect the mortgage company in the event you default on your loan. Talk to your mortgage broker to find out about this type and other programs set up for home buyers offering low down payment requirements.

Calculate Your Home Budget Early

Another important recommendation is to look at your monthly budget and determine how much you can actually afford for a mortgage payment. If you are currently paying rent, this rent amount can give you a good starting figure of what you can afford, unless you are willing to cut out other expenses in your budget to give yourself more wiggle room for a larger payment. Remember you will need to calculate in homeowner's insurance and property tax along with your mortgage payment, as these are usually held in escrow, so your mortgage company is ensured they are covered.

Calculating how much mortgage payment you can afford will be helpful when you work with your mortgage broker to get qualified for a mortgage amount and begin to search with your real estate agent. As your mortgage broker works with the underwriter to get your pre-qualification letter on the mortgage, they will be able to tell you the mortgage payment's approximate amount. This will also give you an idea of a purchase limit for your new home.

For more information, contact your local realtors.