Buying and owning a home is an enormous responsibility. You may wish that there was just a rulebook filled with specific guidelines on how to be a homeowner. Sadly, there may not be a book that tells you everything you need to know in order to never suffer loses, but we want to help home buyers. Buying a home is a monumental step for investing in your future. We want to help you gather more information before you begin the search. Do not panic, you may currently be stressed out, but that is natural. Here is our guide to starting the house hunt:
Step One: Get to know your finances.
It may come as a surprise, but down payments are not necessary for home buyers. Granted, putting down a down payment will reduce the amount you borrow, but it is not required. You will need to figure out your financial situation before you begin house hunting. It is essential that you have enough to pay your mortgage but also enough to pay for other bills and items. Transitioning from renting to owning is like playing a different sport. You will have all the new expenses that you did not have while renting. For example, you will have homeowners insurance, property taxes, homeowner’s association fees, etc.
Step Two: Understand mortgage loans.
Loans, they seem great, but you end up owing money to someone so be careful. Your pre-qualification is your standard, basic financial information. You will need to understand though that they are not including your monthly expenses (gas, food, household items, savings, etc.). You will need to understand your limit because they are qualifying you from what they can see. Also, the amount you are eligible for does not mean you have to apply for that entire amount. Stick to the budget you know that you can handle.
Step Three: There will be additional fees.
Before you can own the home, you will have to pay earnest money and closing costs. The earnest money is paid when you make an offer on the home. This money shows that you are genuine about buying the house. The earnest money is there to help the seller if you back out of the sale. If you back out, the money goes to the seller. If you buy the house, the money is deducted from your house purchase. Lastly, closing costs are approximately two-five percent of the purchasing price.
We hope that this information helped before you begin your house hunt. For more expert advice and tips, please visit From The Floors Up.