Are you looking to buy a new home for you and your family? There are many things to think about when you are about to buy a house, and the mortgage process can be long. However, once you find that perfect house, you should be ready to start the process so that you can hopefully quickly move into your dream house.
Don't make shopping for a home a horrible process. It can be fun, you just have to be prepared. There are a lot of things that you need to do. You need to determine what you can afford and also get the best interest rate, which will be covered in this post.
Determine what you can afford
Buying a house is most likely going to be the biggest financial decision you will make (I can't think of anything larger, unless you buy a plane or something). You need to take a good look at your finances and determine what you can truly and REALISTICALLY afford. If you make $30,000 a year altogether, then a $400,000 house is most likely not a good idea for you.
There are many costs that come along with a house also. Many people do not think about this. Will you be able to afford maintenance on the house (such as lawn upkeep, servicing the furnace, repairs, etc.), the utility bills (which can add up quickly for water, gas, electric, sewer, etc.), insurance and of course property taxes. Property taxes are usually AT LEAST a couple hundred dollars a month, and at our house it is around $2,000 per year. That is most likely on the low end for most of you, and I know some people who pay over $5,000 a year in property taxes.
Find the best loan and interest rate
You will want to shop around and determine whether fixed rate home loans or a variable interest rate will be good for you and your finances. An interest rate difference of just 1% can add up to a decent amount of money, maybe $100 or more every month. Now, if you shopped around for the best mortgage interest rate, you can save yourself a lot of money every month, which will then of course equal to a large amount of savings every year.
I know people who have mortgage interest rates of 3%, and then I also know some who have rates of 7%. It all depends on timing, your credit store, and the real estate market. Right now is supposed to be the time to “buy,” but make sure you are ready. Just because interest rates are low should not be the only reason that you want to buy a new home.
What tips do you have for those looking to get a mortgage?
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