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What You Need to Know About Buying Your First Home

 

By: Jim Lowenstern
 
With the changing season comes a change of scenary. With this change of scenary, there are several things you should consider. This is the case when you choose to buy a new home! Here is a chronological list of things to consider before you buy a new home:
1. Can you afford to leave the rent behind and pay a monthly mortgage?
Although mortgage rates are at their all-time low, you should always do some calculations first!
2. What kind of down payment should you set aside?
Typically, buyers put down 20%. However, with a smaller down payment, the buyer should consider the Private Mortgage Insurance. This is a fee added to your monthly mortgage bill until you have 20% equity of your house. 
 
3. What do you do after you add in closing costs?
Closing costs are usually 4-8% of the cost of the home! Therefore, after subtracting these figures (closing cost), you must figure out how much you can afford each month. Most banks will take your monthly gross income and divide by 3 while also taking into account monthly real estate tax, home insurance payment and monthly loan payment.
 
4. How to decide if these costs are doable?
Keep in mind moving expenses, monthly expenses, and increased living expenses! You can then estimate and see the affordability of the costs. 
 
5. Once you have an idea of how much you can afford, what should you do?
Now it is a good time to consider and determine the extraneous factors in purchasing a home- location, neighborhood, type of house, slow/fast paced environment. After all, you want a home that can fit to you and your future lifestyle (family, kids, ect). 
 
6. What to consider before house hunting?
You should consider what amenities you must have and what you can live without. For example: open/airy spaces, easy access to kitchen, extra bathroom, guest room, and party room.
 
The bottom line is that a little planning can go a long way! Anticipating not only your financial needs, but also your long range goals will go a long way towards making your first home as wonderful as your first love- something you will always remember. 

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