Buying A First Home
One problem plaguing excited first time home buyers is the deposit for the house of their dreams. If you are one of them, this problem can be resolved with a little help from family or friends or the First Time Homebuyer Credit. But all these are just the beginning of your new life as a homeowner and your responsibilities is just starting.
If you have never owned a home before, you may be eligible for first time buyer programs with government insured loans. These programs often have less stringent requirements for credit ratings and down payments than private lenders. If you are comfortable with your current rent payment, shop for a mortgage payment that will be about the same as your rent. A mortgage payment will help you build equity, a rent payment will not.
The first thing couples should do is to stick to their budget. I f that house so perfect for you but the price is beyond your means, don’t fantasize about job promotions and increased pay and think that you can swing it. Be realistic. Assess the price according to your present not future means. Should you get a pay increase, you can always make modest improvements on the house you bought. In the long term, you increase the value of your home and this will serve you well should you decide to sell your home at the right time.
Never jump into a contract without knowing all the facts. You will need a title search and a home inspection on any home you consider buying. Generally the buyer must pay the fees for these services. Check around for the lowest mortgage interest rates you can qualify for to save thousands over the life of the loan.
It isn’t unusual for young couples to receive help from their family with the down payment for a home. It may, however, be to your advantage to use government first time buyer programs. In addition to programs offered by the federal government, you state may also offer incentives for first time homeowners. You may be able to use a 5% down payment or no down payment at all. With a good to excellent credit rating you may still qualify for low interest rates. Even if the down payment is waived, you will need several thousand dollars for closing costs on the loan.
There is the closing fee that can be quite stiff for couples who are buying a house on shoestring budget. Add all these fees to the actual mortgage price and you get the picture. If the cost of the entire mortgage is beyond your humble budget, look for a cheaper home and shop for other lenders who can offer affordable fees and a lower interest rate. Always negotiate for lower closing costs; lenders are willing to listen and give you a discounted closing fee.
So how do you compare lenders? Check out the APR or Annual Percentage Rate which will reflect the total cost of the loan and calculate the Annual Percentage Yield which will show how the compounding interest makes the loan worth the trouble. Ask the lender to disclose both APR and APY. They are bound by law to give this information.
After you have done your own personal financial analysis and decided how much you can afford to spend on a house, it is time to start looking around. Don’t put in an offer on the first house you see, check several properties before you make a decision. Chances are you’ll be living there a long time.
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