Financial Tips for First Time Home Buyers
For a lot of people, buying a house is the ultimate dream that they hope will come true someday. After all, it’s nice to have a whole place for ourselves.
However, the reality of buying a house is the fact that it’s exorbitantly expensive. In fact, the real estate company Zillow has currently reported that the median home listing price this 2021 is $272,446, and that figure is expected to rise by 11.4% in 2022.
As a result, even though 80% of millennials would love to purchase their own houses, only a few of them are actually able to afford the costs, according to the data from Apartment List.
Despite the daunting statistics, your dream of buying real estate is achievable if you are financially savvy. To aid you in this matter, here are some words of financial advice for you.
- Be Realistic When You’re Looking at Houses
When you’re looking through the possible houses you might buy, you need to be realistic before getting attached to a gorgeous house that you can’t afford.
This means that you need to check your income and calculate the possible costs to determine what price range of houses you can handle. You can continue your research on houses once you know your price range.
- Continue to Pay Off Debt
As mentioned earlier, owning a house is really expensive, and if you’re not careful enough, you’ll be drowning in a lot of debt. It is important to continue to pay off your debt as you can afford it, while also being able to make your mortgage payments on time.
- Save for Down Payment and Closing Costs
After paying off all your debt, the next thing you have to do is to save for down payment. Some home loan options require a down payment of 20% or more so that you don’t have to pay for private mortgage insurance, which is an added expense for your monthly mortgage payment. Luckily there are also options for Zero-Down, 3% Down and 5% Down Payments available to qualified borrowers. Consult a 1st CCU Mortgage Loan Expert to find out which mortgage loan option is best for you and your budget. Aside from the down payment, you should also save some money for closing costs. Usually, it costs about 3–4% of the purchase price to close on a house, and these costs pay for the next crucial steps in the home buying process, such as appraisal, credit report, and home inspection.
- Get Pre-Qualified for a Loan
Once you’ve already saved up for the closing costs and the 20% down payment, the next step you have to take is to talk to a mortgage lender and get pre-approved for a loan.
Getting pre-approved for a loan and getting a pre-approval letter will show home sellers that you’re serious, and that can get you ahead in the competitive real estate market.
Buying a house doesn’t come cheap. As a result, you need to be financially prepared first, and the tips above can help you achieve that particular goal. For further advice and information on buying your first home, give the team at 1st Community Credit Union a call at 888-706-1228.
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