Few things in life are
more exciting than buying your first home. The feeling of turning the key for
the first time (or clicking the garage door opener) is thrilling. You'll likely
feel a sense of pride like never before. But getting to that point may be a
challenge. And the challenges won't end once you move in.
The more you know about
the process, the more prepared you can be for the wrinkles that pop up, and the
more you can relax and enjoy homeownership.
1.
It may cost more than you expect.
When you're calculating
your monthly payment, don't leave anything out. Add in principal, interest,
taxes, and insurance, plus any HOA fee. Then estimate landscaping, pool
maintenance if needed, and any other fees there may be. Don't forget to include
your monthly home warranty cost if you have one.
Experts recommend
putting aside a minimum of one percent of your home price for repairs and
maintenance per year, so add that in. Think also about utilities. If you're
coming from a small apartment, you might have a bump in that monthly cost. Only
by taking a real look at the numbers can you get a true feeling for what you'll
pay every month as a homeowner.
2.
You may only have to put three percent down.
FHA loans aren't your
only low down payment option anymore. Ask your lender about 97% LTV loans
that require only three percent down for first-time buyers.
3.
You can probably afford it more easily than you think.
Rents have been going up
way more than home prices in many real estate markets. A recent analysis by
RealtyTrac found that, "Payments on a mortgage used to purchase a three-bedroom
home were more affordable than paying rent on a similar home in 66 percent of
the counties."
4.
But…know how much you can really afford.
Your loan approval will
tell you how much the bank thinks you can afford. But they only know so much.
If you're planning to have a baby or change careers sometime soon and your
income could be affected, you may want to stay lower on the payment scale,
which means a higher down payment or a less expensive house (or both).
5.
You need a preapproval.
Your REALTOR® will tell
you this. Believe him. Even if he takes you out to look at houses without a
preapproval (many won't, since it could be seen as an indication that you're
not serious about buying), you won't be in a good position to make an offer if
you find a place you like. And in a competitive market, that could be
disastrous.
6.
It may be easier to buy a single-family home than a condo.
Strict FHA restrictions
on condos can make for a limited pool of options, and, if you can find one that
is approved, it might have a higher interest rate. Be sure to ask your lender
to provide a side-by-side analysis of a condo and single-family home in similar
price ranges; a home that is priced slightly higher may end up being the answer
when you examine the numbers carefully.
7.
You might be able to get money to fix up your home.
Fashion
yourself a DIYer? Ask your lender about 203(k) and HomeStyle loans.
"Fannie Mae and the Federal Housing Administration have home renovation
mortgage programs that allow buyers to borrow based on what the house is
expected to be worth after the home rehab is completed," said Bankrate.
8.
You might be able to get a gift for your down payment.
"Cash gifts are
also allowed for low-down payment mortgages including the FHA purchase
mortgage, which requires a 3.5% down payment and the Conventional 97 mortgage
from Fannie Mae and Freddie Mac which requires just 3% down," said The
Mortgage Reports.
They're also allowed on
many other conventional loans, and can help a first-time buyer get to a 20
percent down payment that would help them qualify for the lowest rates. Check
out The Mortgage Reports for important details about down payment gifts. Do it
wrong, and your application can be rejected. There also may be tax implications
for improper gifting.
9.
Gift funds may also be allowed for your closing costs.
Be sure to ask your
lender. Not having to come up with thousands of dollars at closing means money
for new furniture!
10.
You'll have a love-hate relationship with your HOA.
You'll appreciate them
when the car up on blocks for a week in front of the neighbor's house is towed.
Not so much if it's your car up on blocks.
11.
You'll want to thoroughly check out the neighborhood.
Make sure there are no
development plans that may affect your home value in the neighborhood you're
looking at. Talk to the neighbors. Check for sexual predators nearby. And spend
some time in the area at different times and on different days so you can
observe the neighborhood flavor. You also might want to arrange to commute
from/to the house one day to see what you have in store.
12.
You'll want good schools. Even if you have no kids.
Families inherently seek
a neighborhood with quality schools. But studies show that good schools can
dramatically affect home value, making these neighborhoods desirable to buyers
without kids as well. "Living near a high-scoring school can increase your
home's value by over $200,000, according to the Brookings
Institution," said AOL.
13.
You can derail your loan approval.
Don't check your credit,
get a new store credit card, close an account, or buy a new car while you're in
escrow - you might not stay in escrow. Listen to your lender and hold off on
anything that could affect your credit or financial situation until you close.
14.
The home inspection will reveal some issues. It always does.
Keep a cool head and let
your Realtor handle any negotiations. You just might come out better than
before.
15.
You're gonna get a tax break.
You're probably already
looking forward to this, but do you know the details? Your mortgage interest is
a write off. So are your Private Mortgage Interest (PMI) fees and any points
you pay to buy down the rate on your mortgage. All told, you could be getting a
nice little return come tax day. Check out this calculator
to estimate your tax break.
16.
It will be more work than you imagined.
Stuff leaks, breaks,
makes weird noises, shuts down, peels, crumbles, flames out, and falls off. You
will learn how to fix it all, or at least how to make a phone call to someone
who can.
17.
It will all be worth it.
Article By Jaymi Naciri
on Realtytimes.com
Courtesy of First Choice
Title Services & Escrow, Inc.
First Choice Title Services &
Escrow, Inc
3
SW 129th Avenue, Suite 202
Pembroke
Pines, FL 33027
http://www.firstchoicetitleservices.com/
Phone
(954) 433-7680
Fax
(954) 433-7355
maria@firstchoicetitleservices.com
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