Before you start visiting every open house that you see and looking to seek out a lender or two to get pre-approved. Doing that you’ll get a firm grasp on how much you’re willing to spend on your future home.
Seek out a realistic budget that you can work with. Or, you can contact a financial professional and have him or her crunch some numbers for you. By doing so, you’ll have a true estimate of what you can afford and what’s way beyond your price range.
Plenty of buyers overstep their financial boundaries and find themselves in a predicament down the line. Remember to consider every factor, as a home will undoubtedly be the biggest purchase that you’ll make in your lifetime.
Once you have a good understanding of your budget, it’s time to think about the down payment that you’re going to make. Today’s home buyers are saving at least 20% (minimum) for the down payment and another 3 to 5% for closing costs – which is a whopping amount if you think about it. However, by taking this route, you’ll avoid having to purchase private mortgage insurance – we’ll talk more about insurance in a bit.
Take a Look At Your Mortgage Options
If you’re for the entirety of your home upfront in cash, you’ll likely be pulling out a mortgage.
Starting this process involves finding a trustworthy mortgage lender that’s easy to communicate with. They will provide you with detailed information and options and can answer every one of your questions in detail – which I assume that if you’re a first-time home buyer that you’ll have plenty.
To break this down in a simple manner, there are two primary options that you’ll be choosing from. The first is known as a fixed-rate mortgage, which keeps your approved rate steady throughout the duration of your entire loan. The second is an adjustable-rate mortgage, which tends to fluctuate based on the market. Both have their pros and cons, so speak with your mortgage lender about the what’s best for you and your financial situation.