Sunday May 12, 2019
So you’ve decided to take the plunge and buy your first home! 👐 Whoo hoo! After the initial excitement of ‘We’re going for it!’ has subsided, you may be wondering what to do and where to start. You probably have lots of questions, and as well you should! A home purchase is a huge investment, probably the single largest you’ll ever make, and you want to do things right. We’ve got you! Check out some questions you should address NOW before going any further.
How much home can I afford?
This is probably the single most important question that needs answering, because it affects EVERYTHING else, from mortgage to insurance and beyond to ongoing maintenance. When determining how much home you can afford, it’s critical that you consider your overall housing costs. This includes your monthly mortgage, HOA dues (if applicable), property taxes, PMI (if applicable), and insurance. It’s a good bet to factor in a budget for monthly maintenance and repairs, too. How to get started? See 👇.
What is pre-qualification?
You can run the numbers using an online mortgage calculator (we like this one HERE), but the best way to really understand what the dollars and cents are telling you is to get pre-qualified through a mortgage lender. A pre-qualification will give you an estimate of how much of a loan you will qualify for and approximately what you can expect your interest rate and monthly payment to be. It may sound tedious, but this crucial step is actually beneficial because it will further help you find a great home in your price range. Why look at two-bedroom condos when you can afford a three-bedroom house with a sweet backyard?
Do I need a realtor?
It depends on how hands-on you wish to be in the process, and by hands-on, we mean eyeballs-deep in real estate legalese. Some people enjoy this process; most do not and prefer to rely on the pros. The choice is yours, however a first-time home purchase is already stressful enough, so our view is why throw more into the mix by taking it all on yourself? A seasoned professional can help you navigate the process from end to end, and may even save you some money in the transaction.
How much money should I put down?
Twenty percent is typical, however that can be a real burden for first-timers, so you have some options. Depending on credit history, borrowers can put down as little as 5% for a conventional loan, and as low at 3.5% for an FHA loan. Contact your preferred lender for a complete picture of your home loan options.
New vs. resale?
Should you buy a brand-new home or a resale home? Both come with pros and cons, and you’ll have to prioritize what’s most important to you, along with your budget, in order to make the best decision. A brand-new home is lower maintenance and a blank canvas for your personal style, and there are many opportunities to customize according to your preference, however a larger purchase price typically comes with that. On the other side, a resale home may look more cost effective at first, however, depending on the age of the home, may include costly renovation work in the near future = headaches, stress, and a drain on your bank account that you neither want nor need.
How much insurance do I need?
There are several things to consider when shopping around for a homeowner’s insurance policy, but bottom line, you want something that covers you in the event your home gets completely wiped out and needs to be rebuilt from the ground up. Most Americans underinsure their property, so definitely take the time to understand what your specific needs will be depending on the home you purchase. Get started by addressing some of the questions outlined HERE.
What if I want to move in a couple of years?
You’ll need to live in your home at least two years to avoid paying any capital gains taxes on the property, however if you want some real equity, you may need to wait five to seven years. A home purchase is a longer-term investment, so if you’re eyeing a new job in another state or plan to move quickly for any reason, you may want to reconsider until you’ve decided on a place to settle.
And by the way, Mountain House is a charming small town and a wonderful place to put down some roots (shameless plug!). Check out our lineup of beautiful brand-new homes for every lifestyle and price range HERE.
You can also click HERE for more first-time buyer tips. Happy house hunting!