Buying your first home can be a very exciting experience. By purchasing a house, you can finally have a place that you can call your own, and you will not have to worry about dealing with a landlord or paying rent toward a residence that you will never own. Plus, if you buy carefully, then you could make a nice investment that could benefit you in the future.
Of course, even though buying a home can be wonderful in many ways, it’s not something that you should just jump into. In fact, there are a few things that you should know so that you can ensure that you are making the right decision by buying a home. These are some of the things that you should know before you go in to meet with a mortgage lender and before you sign on the dotted line.
1. Your Credit Score Does Matter
There are many reasons why you might have bad credit. Regardless of the reason, you should know that your credit score does matter. You might have heard of some of the programs that are out there for people who have less-than-perfect credit and who are looking to purchase a home. Of course, it is possible to buy a house with a less than perfect credit score, but you should know that your credit score does matter. If you have a lower credit score, it will be harder for you to get approved, and you will have fewer programs to choose from. Additionally, you may end up having to pay a much higher interest rate; this can be bad enough when you are dealing with a small balance on a credit card, but the interest costs can be astronomical when you are buying a house. Therefore, you should definitely pay attention to your credit score and do what you can to establish or repair your credit before buying a home.
2. Putting Down a Big Down Payment is a Good Idea
Again, you might have heard of programs that make it possible for you to buy a home without a big down payment. It’s true that there are low and even no down payment options out there, and you might find that one of these options is right for you. However, for many people, putting down at least 20 percent for a down payment is a good idea. Then, you can increase your buying power and make it possible to buy the home that you truly want. Plus, you can help increase your chances of getting approved for a mortgage. Perhaps more importantly, however, you can greatly reduce both how much you pay in interest on your home and how much your monthly payments will be. This can make a big difference in your budget, and since many mortgages are for 15 or 30 years, this is something that can impact you for many years to come. It can also allow you to avoid getting private mortgage insurance, which is yet another way that you can save money on your home purchase.
3. It’s Not a Good Idea to Overbuy
Just because you can get approved for a mortgage loan does not mean that it’s a good idea to get one. Even if you think that you are financially ready to buy a home, you shouldn’t assume that buying the biggest and best home that you qualify for is going to be your best bet. Many people find that their financial situations change, and some people feel “strapped” by big mortgages just a few months after their home purchases. If possible, consider going “modest” with your home, and you might find that you are glad that you did later on.
4. Homes Cost More Than You Might Think
When you think about whether or not you can afford a home, you might just think about the cost of your monthly mortgage payment. However, owning a home can be much more expensive than that. You also have to factor in the cost of things like homeowners insurance, home maintenance and more. Make sure that you think about these things before buying a home so that you can be fully prepared for all of the responsibilities that go along with home ownership.
As you can see, there are a few things that you should know before buying a home. If you keep these things in mind, then you can help ensure that you are ready to buy a home before you ever meet with a mortgage lender.