You’ve been scrimping and saving and working toward the home of your dreams, and now it’s time to consider buying a new house! That’s exciting but it’s also a little daunting.
The market is hot and once you find the home you like, having your offer accepted isn’t always a given. If you’re ready to buy a new home, take a look at our home buyers guide for five important steps for buying a new house.
1. Think About Timing When Buying a New House
Buying a home is a financial commitment and it usually only makes financial sense if you’re going to stay for a few years.
Take a look at your goals over the next few years and make sure owning a home fits in. You may be ready to look at resales right away or you may want to negotiate for a pre-construction sale that you won’t move into for a year – click here for more.
2. Solid Financial Footing
You’ve got the down payment, your job is secure, and you’re ready to do some house hunting. It’s crucial you take the time to sit down and create a budget if you haven’t already. You need total knowledge and control over your expenses.
Write down your post-tax income and all your debts. Track all your monthly expenses, and don’t forget the little things like that $65-dollar-a-year app subscription that automatically hits your credit card.
Once you have all your expenses written down, see where your money goes and how much you have left for a mortgage payment.
3. Calculate Your Mortgage Payment
Before you look at homes, know your limits. Remember a home comes with more than a mortgage payment. There are also taxes and upkeep. If you put down less than 20%, you’ll also pay PMI insurance.
Keep all these other expenses in mind and avoid going to the top of your limit. Even if you qualify for a big mortgage, consider looking at homes that cost a little less.
Plan on putting a little money aside for emergencies every month. You don’t want to get caught mid-summer with a broken AC and no money to fix it!
4. Pre-Qualify for a Mortgage
Look at the different types of loans and decide which works best for you. These include:
- FHA loans
- VA loans
- Conventional loans
- Jumbo loans
- Renovation loans
It may make sense to look at older, less expensive homes and get a renovation loan. You can pre-qualify for a loan which makes the buying process smoother. Compare different lenders’ rates and closing costs before making a final decision.
Ready to Buy a New House?
Buying a new house is exciting, fun, and scary all at the same time. If you think you’re ready, follow the above tips about how to buy a house and get yourself ready!
Interested in more articles like this? Check out the Finance and House sections of the blog!
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