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Buying Your First Home

Are You Ready To Buy Your First House? 

There are many people sitting on the sidelines trying to decide if buying a house is right for them. Before they buy their first house, some wonder if it makes sense to purchase a house before they get married or start a family, while others wonder if their current incomes and expenses can afford them a mortgage.

Buying a house is one thing, being able to afford it is another. Regardless, buying a house that one can afford takes careful financial planning and knowledge of how to save money (and even lower closing costs). To really know if now is the right time to buy your first house, you need to both save money for the down payment and prepare yourself for all the costs associated with buying a house. Below are some factors to consider and some advise on how to save money when buying a house.

1. Is Buying A House Something I Can Afford?

Typically, you will need to put 20% down toward the purchase of your first house to avoid paying PMI (Private Mortgage Insurance used to protect the bank lending you the mortgage loan). This means 20% of the purchase price of the first house will be collected at your closing.

Before your actual closing date, you will likely be paying these fees: Inspection fee, loan application fee, appraisal fee, credit report fee. some of these fees can be paid at the actual closing.

The closing is when the actual transfer of property and title will take place from the seller to the buyer. While closing costs may vary, you will likely be paying the following fees: attorney fee, escrow / title fee, courier fees, PMI, property tax escrow deposit, home owner association reserve fees (if applicable), homeowners’ insurance, lender’s policy title insurance, loan discount points (if applicable), loan origination fee (usually 1%, if applicable), prepaid interest between closing and the day of your first mortgage payment, property tax, survey (when applicable) recording fees, transfer taxes (usually paid by seller, but sometimes by buyer), underwriting fee. A useful tool for reviewing the average closing cost in your state can be found here: Bankrate.

The best thing to do is to speak with a mortgage lender, who will not only help determine if you are a candidate for a mortgage, but will pre-qualify you, will discuss closing costs with you, and will help you identify the maximum price you can afford when buying your first house. Ask your lender how to further lower closing costs while buying a house.

2. How Much Of A First House Can I Afford?

Your mortgage lender will review your qualifications based on your credit, income, and debt to determine how much home you can afford. Typically, your monthly mortgage payment, including taxes and insurance, should not exceed your pre-tax income by more than 28%. Also, your entire debt combined, including the mortgage payment, any car payments, any revolving credit card payments, other loans you carry, and any other monthly payment commitments, should not exceed your pre-tax income by over 36% when buying a house.

While the best calculation will come from your mortgage lender, a great tool for learning how much house you can afford is found on Nerdwallet.

3. How Can I Save Money Buying a House?

There are several ways to save money and lower closing costs when buying a house you can afford. Using closing cost rebates to lower closing costs is a highly effective way to save money buying your first house.

  • Get mortgage quotes from at least three lenders. Compare them thoroughly and ask questions in advance about promos and deals to save money on loan fees.
  • Don’t forget to get one quote from your own bank, where you keep your money. They often have exclusive offers for their customers to lower losing costs or save money up front.
  • Another way to save money is to ask lenders in advance if they will beat a competitors quote.
  • Schedule your closing at the end of the month to save money on interest and  pro-rated charges. This will lower closing costs when buying a house.
  • When buying a house, put 20% of the purchase price down (when possible) to save money and avoid a PMI payment.
  • Ask lenders which fees are actually negotiable items. That means you can save money for deals on those services yourself (Examples: survey, title search).
  • Improve your credit score. Your interest rate is directly impacted by your credit score. Better credit means lower interest. Save money with lower interest rates .
  • Get at least 3 quotes from home insurance agents and pick the best one to save money when buying a house. Also, to save money, buy the minimum needed insurance.
  • Don’t buy all the home you can afford. To save money now and later, buy your first house with comfort and affordability in mind.
  • Save money buying a house using this buyer rebate program to lower closing costs. Save 0.2% of the purchase price via closing cost rebates, while working with one of the best local Agents (you choose the Agent yourself from a local pool of hand picked specialists). With an average 5+ year tenure, Agents from this invite-only network work hard to make your first house buying experience the best possible. Typical closing cost rebates on a $250,000 home will save you $500.00 in closing costs ($250,000 x 0.2%). Lower closing costs and closing cost rebates encourage buying a first house you can afford.

So, mortgage agents will help calculate whether you can afford a home and how much you can afford when you do decide to buy your first house. Next, follow the advice above to save money and lower closing costs.  Finally, use closing cost rebates to lower closing costs further and save money.

Save money with Closing Cost Rebates and lower your closing costs. 

 

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