Entering into home ownership is a big step, one of the milestones of many American’s adult lives. The excitement of such a step can overshadow the amount of planning and preparation that should be invested.
Buying a home, particularly with the assistance of a home mortgage, requires that certain questions are asked. These questions should be asked early, before any potential homes are considered for purchase, and before any documentation is completed.
The five questions below should be asked by every first-time homebuyer before making that large investment.
- Considering the Costs
There are a lot more costs involved with buying a home other than just the home. Far too often, first-time homebuyers do not realize this and don’t save up enough money to cover their other costs, such as closing costs. In addition to finalizing a mortgage, there are costs in simply owning a home. These costs include:
- Real estate taxes
- Homeowner Association dues
- Ongoing maintenance and repairs
There are other monthly expenses that also must be considered to ensure that the homebuyer has sufficient flexibility in their monthly budget. These include larger utility charges and homeowner’s insurance.
- What is Proper Planning?
The best way to begin planning for homeownership and for a home mortgage is to gather information. Sources of information include family and friends that have undertaken the journey into homeownership, Internet resources (such as this article), as well as making contact with loan officers from trusted mortgage lenders.
Loan officers understand that the mortgage process is a long cycle. This means that they are prepared to spend the quality time early and often to help future customers. Building a relationship with a loan officer is a great way for first-time homebuyers to anticipate every potential point of planning.
- How Much for the Down Payment?
As a general rule of thumb, the more money that can be put down toward the cost of the home, the less money the house will cost overall. The smaller the principal that must be financed with a mortgage lender, the less interest will accrue over the term of the loan whether it be fifteen years, thirty years, or other term.
With that being said, there are loan programs to help borrowers that do not have a large sum of cash for a down payment. These lending programs have different characteristics in exchange for low down payments. These include mortgages through the VA or FHA mortgages. There are also down payment assistance programs available in various states. First-time homebuyers should check out all the options available to them to ensure they are making an informed decision.
- How Much Home?
There is no easy way to tell a first-time borrower how much home they need. Are they a newlywed couple? Then a small starter home or metro apartment may be a great first home investment. Are they a family of five with a live-in grandparent? Then they’ll obviously need more space.
Perhaps the easiest way to determine how much home a borrower should consider is examining how much they can afford in a monthly payment and working backwards towards a total amount to borrow. Mortgage lenders can prequalify borrowers to provide an estimate that will help target their search to the right home value.
- Are There Errors of the Credit Report?
The credit report is one of the most important factors that Americans have assigned to their names. This is perhaps most true when it comes time to purchase a home. While credit agencies strive for thoroughness and accuracy, mistakes do sometimes happen.
Before a loan application is put forward, borrowers are encouraged to examine their credit report for any errors or red flags.
Pacific Union Financial
Pacific Union Financial, LLC is a full-service mortgage lender providing mortgages, refinancing, and loan servicing across the country and around the corner. With expertise in home loans for credit levels from best to bruised, we’d love to help you enjoy all the benefits of homeownership. Get in touch today and let us show you how we work hard to make mortgage easy.