Tips for Buying a Home
Are you thinking about buying a home? It is important to think through the home buying process. The most realistic place to start is with the costs. We can help! Check out these tips for buying a home.
Down Payments
The cost of buying a home depends on where you live and what you are buying. First, you’ll need cash for a down payment, which is usually a percentage of the total cost of the home. Some programs, such as first-time homebuyers, require less of a down payment. There are 0% down payment programs available. Contact a Home Loan Expert to see if you qualify. Typically buyers are encouraged to put down 20% to avoid paying for private mortgage insurance (PMI). If you put down less than 20%, be prepared for that additional cost, which could be a few hundred dollars a month on top of your mortgage payment.
Mortgages
You will want to get preapproved for a mortgage so you know what you can afford. Pre approval is not a guarantee that you’ll qualify for a mortgage. A home loan expert will look at your income, assets, and credit score. Your mortgage payment depends on the principal amount borrowed, the interest rate for borrowing the money, and the term or length of the mortgage. Check out Banzai’s Mortgage Affordability calculator to get a realistic idea if you can afford a mortgage.
Closing Costs
Before you officially get the home, you will need to finalize the sale and sign many, many documents. This is also when closing costs are due. They are a one-time cost that you either pay upfront or roll into the mortgage. Closing costs cover expenses of applying for the loan and finalizing the sale, which typically run between 2-5% of the purchase price.
Closing costs may include:
- Property appraisals
- Title search
- Title insurance
- Origination fee
- Underwriting fee
- Points
Not sure what some of these terms mean? Check out our handy glossary of home buying terms here. You will need to scroll down to the bottom of the webpage to find it.
In Conclusion
There is not a specific home buying timeline that works for everyone as each person’s situation is different! Contact a home loan expert to get started!