Knowing When You Are Ready to Buy
Throughout the United States millions of people are looking to purchase a home now and in the future. Over the past few years interest rates have come to a point that it is now more affordable than ever to purchase a home. In fact, buying a home makes more sense than renting.
If you want to buy a home you will need to save your money so that you will have enough for the closing costs and down payment. The down payment is usually around 15% of your property’s price or value, whichever cost is lower. In order to be on the safe side though you will want to have 20% available to put down. If you cannot do this then you will need to buy private mortgage insurance. This will cost you more when it comes to your monthly payment though.
Most of the time your closing costs will cost about 5% of the property price. Before purchasing the home you should get an estimate. While this estimate will not be exact, it will be really close and so you should plan to save up a little extra money to be sure that you are prepared for this expense.
When you know exactly what you can afford and you are willing to stick with this plan, then you will know you are ready to purchase a home. You should also ensure that your new mortgage is not going to be more than 25% of your total monthly income. While some lenders will tell you that you can afford to pay more, do not let them talk you into doing so. Stick to your budget!
You also need to remember that there is more money involved in a home than just a mortgage payment. There are utilities, homeowners insurance, property taxes and maintenance costs too. A lot of responsibility is needed for owning and caring for a home. If you are a first time homeowner this will take some time to get use to.
Before you start filling out applications check your credit report for any errors. While you might think you do not need to do this, you should know that it is easy to get an error here without even realizing it. This error can cost you a lot of money in interest rates because the error will decrease your credit score and place you in a higher interest rate bracket. This is why it is so important to look at your credit before talking to a lender.
Checking your credit report early enough will provide you with the time you need in order to fix any problems and get your credit back on track. You need to understand that it is going to take some time to rebuild your credit though. Sometimes it may even take several years to do so this is why it is very important to plan ahead.
Purchasing a home is going to require some commitment from you. Of course you should always strive for the best possible deal. This requires that you know your credit so that you can get the best possible interest rates. You do not want to buy a home if you have bad credit because you will have to pay a lot more money for your home. Taking the time to repair your credit will not only save you money but it will also help you to buy a much nicer home for the amount of money you have available to spend.