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House Hunting: Beginner's Checklist


Transitioning from renting to owning your own home can be a huge step. Ownership and leasing each come with their own costs and benefits: fixed-rate mortgages eliminate the worry that landlords will increase rent out of the blue, but it also means you’re personally in charge of making and financing repairs.  Experts suggest going through this checklist before you begin the process of your first house hunt:
How Much Can You Afford?
It is important to take the time to calculate how much you can actually afford to spend on a home. Remember to factor in current expenditures like rent, food, gas, travel, entertainment, car payments, and student loans. Experts recommend around 28% of your monthly income go towards housing. 
Do You Have a Down Payment?
While a 20% down isn’t necessary to take out a loan, putting more down upfront can help you get better lending rates, make you more competitive in the market, and lower your long-term interest rates. It is possible to take out a loan with a minimum of 3.5% down, but anything less than 20% increases your monthly payment because it requires you to pay private mortgage insurance (PMI). Additionally, paying a large down payment shows planning and financial responsibility, not to mention gets you used to budgeting.
"When you really work to save enough to get 15%-20%, it shows you have a meaningful commitment," said financial planner and senior vice president SVP at Univest 
Wealth Management, Bill Van Sant. 
Will You Have Money Left Over After Closing?
Your bank account shouldn't be completely empty after closing on a property. A rule of thumb is to make sure you have an emergency savings fund that will cover around three to six months of living expenses on hand at all times.
Bill Van Sant recommends keeping an additional six to nine months of mortgage expenses available.
"First-time homebuyers are typically looking at older homes because of their lower price point, and they require more work. You need that 'hanging around' money, in case the A/C or heater goes."
How’s Your Credit?
The higher your credit score, the better the lending terms and rates banks will offer.
A credit score of 750 or higher is generally considered excellent and will make you the most attractive candidate for a loan.
What Other Debts Do You Owe?
You can calculate your debt-to-income ratio by adding up all your monthly debt payments and dividing it by your gross monthly income. An unwritten but financially critical rule is that your debt should not exceed 43% of your available credit if you plan to take out a mortgage.
Will You Stick Around?
Buying a house only makes financial sense if you plan on settling down in the area, and actually living in the house for at least 5 years. 
A home purchase rings up to a substantial upfront investment, including the price of the home, added costs like taxes, closing costs and escrow fees. It will most likely take a while to pay off.
For more Buyer’s Tips, check out the resources on [Click Here]