subject: Buying Your First Home [print this page] First, you should determine if you are ready to buy a home. Home ownership is a lot more expensive than renting because you are responsible for paying for all the repairs.
You may also have added utility costs, such as garbage and water. In addition to that you will need to pay for taxes and insurance related to your house.
All of these costs add up quickly, and if you are not financially prepared, you may end up in a very negative position. You should take the time to get out of debt and save up an emergency fund, before you purchase your first home.
You should definitely get rid of all of your credit card debt first. Second, you should begin to shop for a loan.
You need to get preapproved before you shop for a home so you can know to look within your price range. You should contact at least three different lenders before you decide which loan to take.
A mortgage broker will look at several different loan companies to find you the best rates. However, your small local bank or your credit union may have options that will save you money as well.
Once you find a loan with the correct terms you can begin shopping. When it comes to your mortgage you may be surprised at the different loan types and payment options available to you.
Usually a fixed rate fifteen or twenty year loan is the best option as it can help you lock in a low rate. You may be considering creative financing to cover the down payment, but you should be careful when you make these choices.
You want to build wealth with your house purchase and if you make the wrong choice you may end up hurting yourself financially. You also need to determine how much home you can really afford.
A good rule of thumb is to keep your mortgage along with your taxes and insurance between twenty five and thirty percent of your income. Other experts advise that your home cost be limited to two and half times your annual salary.
If you spend too much on your mortgage you may not be able to meet your daily obligations let alone save for retirement. Once you have determined how much you can really spend and are pre-approved you should find a good realtor.
Your realtor should listen to your wants and needs carefully. They may make recommendations or explain the market to help you find a house that suits your needs and that you can afford.
They should offer several different options. Once you make an offer your realtor should work to negotiate terms that you are happy with.
A good way to find a realtor is through the recommendations of friends and colleagues. Another important step is a thorough home inspection.
This is different from an appraisal and you have to pay for it. The home inspector will look for hidden problems with the house and bring to light any issues that may prevent you from buying the home.
This may include mold problems, termites, foundation problems, or a bad roof. The inspection can save you thousands in repairs later on.
Additionally you may be able to negotiate a lower price if you know the house needs a new roof. Once you have bid on your home and the offer is accepted you will go into escrow.
The escrow holder will work to make sure that all the documents, money and other necessary information is together before you close. Escrow is set up to protect the buyer, the seller and the lender.
It can take time to complete escrow, although the time really depends on circumstances around your purchase. Once everything is completed for escrow you will sign the closing papers.
You may or may not sign your mortgage papers at escrow. If you do, you can request that the bank send a representative to help you fully understand your loan.
Once you have closed on your house, it is time to move in. This means you can paint, unpack, and enjoy your new home.
Be sure that you change your address with your bank, and other accounts. You will also need to set up your utilities and cancel your old ones as well.
