Posted by: Regent Homes, on August 27, 2013
Buying a home is usually the largest purchase a person will make in their lifetime. Going from renter to homeowner can be a process that is filled with anxiety and questions, but with a little research, first time homebuyers can confidently own the home buying process. If you’re looking to get out of that rental (or your parents’ basement), consider these 5 primary considerations:
Start with the down payment
The down payment is the initial hurdle that potential homeowners must confront. Paid up front, the down payment is a percentage of the purchase price of your new home. Most lenders consider this to be a general indication of your investment in the home, making it an important factor in the lending process. Typically down payments fall between 10% and 20% of the purchase price, depending on the type of loan.
Determine how much home you can afford
When looking at buying a home, a consumer must know what they can afford. A lot of people stretch themselves out to make their payments, and this can have dire consequences. There are plenty of formulas that can help you determine your comfortable price range, but you should consider the many other financial responsibilities you have:
- Personal Savings
- Health Insurance
- Retirement Accounts
- Car Payments
- Car Insurance
- College Loans
- Utilities and Upkeep Expenses
A prospective buyer should also consider PMI, insurance and property taxes when they factor in their total cost.
As the old saying goes, location, location, location
When purchasing a new home, a buyer should research neighborhoods. One should look at the schools, the parks and crime statistics when analyzing a neighborhood. Remember, even people without kids need to factor in school districts, as a good district will be a selling point when listing the house in the future.
Know the value of a brand new home
Either way, one must consider all of the factors when purchasing a new home. When buying a home that needs no repairs, a buyer may pay higher payments but will save on home improvement costs that are difficult to predict and even more difficult to budget. Not only that, one should consider all of the costs related to the house. Costs one must factor include energy, commuting costs, HOA fees and the cost to maintain the property.
Buying a home is a tremendous financial step for most people. A potential homebuyer must do copious amounts of research in order to discover what they want in a house, what they should expect financially, and how to effectively save money and time throughout the process.
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