When buying your first home there are key things you must do in order to be successful. These are important also for those of you who are experienced home buyers, and those home sellers thinking about selling your current house then buying a new home.
In Part 1 we discussed the importance and value of getting a lender pre-approval for a loan.
Part 2 was about the benefit to you with working with a well-qualified Buyer Agent who can and will look out for your best interests. The listing agent can’t do that!!
Part 3 focused on why it’s important to know what you NEED in your new home.
In part 4 you learned about the importance of understanding the local housing market conditions and their impact on your search, pricing, offer strategy and more.
So here’s Part 5. It’s about understanding and preparing for the financial side of your home purchase, and after!
KNOW YOUR FINANCIALS!
The purchase price, of course, is the main financial issue in your home purchase. It’s the biggest investment you are likely to make, and for many buyers this means qualifying for and obtaining a mortgage to pay for the house, along with whatever down payment you have. Most buyers are using a mortgage of 80% to 95% of the purchase price – no you do NOT need to have 20% down!
We’ve already talked about the necessity of getting pre-approved. Here’s where the financials really speak loud and clear, since the lender will look at your income, debts, assets and credit to determine what you qualify for. If you are not in a good position financially because of credit issues or too much debt you may be limited in what you can quality for, and may have some work to do to fix your credit. It’s not unusual for people to have some credit issues, and these can be fixed over time and then will qualify for a loan.
It’s important to be aware of the closing costs associated with buying a house, since these are over above the loan and down-payment.
The closing costs will vary depending on the cost of the house, the loan you are getting, the fees charged by the lender, the required pre-paid interest and property taxes, and other possible fees. These will be paid at the time of closing. You can read more about closing costs here.
If we work together in your home search I will provide you with an estimate of your closing costs based on the purchase price you anticipate. The lender is also required to provide an estimate of their fees after you officially apply for a loan.
There are other costs to consider as well! Once you own your home there will be annual property taxes (these are paid semi-annually in California and may be part of your monthly mortgage payment), HOA fees (if applicable), home owner’s insurance, maintenance and repair costs, utilities (gas, electric, water, sewer), landline (if you have one). And of course there are those emergencies that crop up when you least expect them!
You may think, wow, I am going to have a lot of costs as a homeowner, but it’s all worth it to have a place that’s yours that you turn into your home!!