March 25, 2021

What to Know Before Buying Your First Home

Quick facts to know before you close the deal

Check your credit score

Your credit score is important when it comes to determining your financing options for your home. A good credit score can lead to a low-interest rate and save you tens of thousands of dollars over the term of the mortgage. Learning about your credit score can showcase where you stand with lenders and if you need to strengthen your credit score before applying for a mortgage. The higher your credit score is, the lower your interest rates will likely be.

Know how much you can afford

Before making a decision on a house, you need to calculate how much of your monthly income will go toward your mortgage. A good rule of thumb is to keep your housing expenses to no more than 28% of your monthly gross income. You also need to keep in mind your other debt and monthly payments such as credit card debt, car loan, student loan, and others. This is an important factor when it comes to determining which home you can afford.

Know the local real estate market conditions

When you find a home that interests you, research the local market conditions. Find out about the prices and demand for homes in the area. You will get an idea of the home’s value and you will be able to make smart offers and negotiate with sellers.

Down payment options

When it comes time to seal the deal on your dream home, you will need to take into consideration the down payment options that you have. The down payment is the upfront cash you pay towards the home purchase. Some lenders might offer a first-time buyers program for the down payment. Explore all your options so you will know how much to save for a down payment.

Buying a home is a complicated process, but if you do your research and consult all your available options, you will be more confident when you finally make the decision to purchase a home. If you have questions about loans or mortgages, reach out to your local bank for assistance.