Owning your own home can provide you with a wonderful sense of
pride and stability. You will be able to take advantage of tax
deductions only available to home owners and make a substantial
investment in your future. Use this guide to buying a first home
to get the best home you can afford. Follow these home buying
tips to get started on the most important financial purchase in
When you’re ready to get serious about buying a first home, you will need to figure out how much house you can afford, based on a typical ratio of having a mortgage that does not exceed more than 33% of your gross monthly income. Remember that in addition to your mortgage and home maintenance, home ownership also includes the additional costs of property taxes and homeowners insurance. If your down payment is less than 20% you will also probably have to add Private Mortgage Insurance (PMI). When buying or selling a home, it’s always wise to first speak with a reputable lender to determine how much home you can afford to start this process.
Knowing what kind of mortgage programs and offers are available to you can be confusing and overwhelming. You will want to consult with a reputable mortgage broker to see current home buying interest rates. By submitting RateSite’s simple online form you can connect with multiple Mortgage lenders who will get in touch with you to discuss your options.
Make sure your finances are in order before you begin the process of buying a first home. Get copies of your credit report a few months ahead and correct any errors you discover. (Be prepared to explain any past credit problems with your loan officer.) After bankruptcy, buying a home can seem more daunting than it actually is. You may be required to put more money down or accept a higher interest rate but you will still find lenders willing to work with you to find the best home you can afford.
The usual rule of thumb when buying a first home is that the purchase amount is about two-and-one-half times your annual salary. Get a better understanding of your debt to income ratio and what you home you can afford by using RateSite’s Mortgage Rate Calculator.
In most cases, you will need to come up with a down payment of 10-20% of your estimated purchase price when buying a first home. If you qualify and have good credit, there are lenders who offer mortgages that require a down payment as small as 3%. Some lenders also work with buyers with less than perfect credit, or after bankruptcy, but the mortgage loans offered of this type are usually at a much higher interest rate. Within the guide to buying a first home, you’ll find that if your down payment is less than 20% you will have to add Private Mortgage Insurance (PMI). To secure the best interest rate, plan to have a minimum of 20% of the sales price to put down. Of course the more you put down, the lower your monthly mortgage payment and the more home you can afford.
You're much better off getting pre-approved or pre-qualified for a mortgage loan prior to starting your house hunting so you can know how much home you can afford. Getting pre-approved for a mortgage loan will you save you from wasting time looking at houses you can't afford and put you in a better position to make a serious offer when you do find the right home. Many sellers will accept your offer over another if you are pre-approved and the other buyer is not.