Buying your first home can be both exciting and overwhelming. How much home can I afford? What do I need for a down payment? Should I choose a variable or fixed interest rate?
Buying a first home is one of the biggest investments a person may make in his or her lifetime. To ensure you are ready, it’s key to arm yourself with the right information. To begin the process, ask yourself the following questions:
*Where am I financially? If you don’t have a budget, start one now. Before you can plan for a big investment like a home and all of the expenses that come with it, you need to know where your money is going each month. Next, map out a mock budget that takes into account a monthly mortgage payment, taxes, insurance, unexpected repairs, etc.
*Do I have enough of a down payment? In most cases, a down payment of 20% of the home price is standard. That means for a $250,000 home, you would need $50,000 as your down payment. There are ways to get around the 20% down payments, but they may cost you. Additional programs are available that require as little as 3.5% down payment, but putting less down does increase your monthly payment cost.
*Do I have an emergency savings fund? Financial planning experts recommend having enough savings on hand to take care of three to six months of your living expenses.
*How reliable is my income? Purchasing a home is huge financial commitment; that’s why it’s key to have a consistent cash flow to cover your monthly housing payments. And, don’t forget to take into account the unexpected that typically comes with home ownership – i.e. a new roof, landscaping, etc.
*What state is my credit report in? A good credit history can be instrumental in securing a lower interest rate on your mortgage and, therefore, a lower monthly payment. You can check your credit history free annually from each of the three main credit bureaus at Annual Credit Report.com
To learn more about first-time home buying, contact one of Salin Bank’s mortgage professionals today at 1-800-320-7536 or visit, our Mortgage Center and begin your mortgage application today!