Budget Tips For First-Time Home Buyers
If you're looking at single family houses for sale, money and financing will be at the forefront of your decisions. Many first time buyers don't know all the costs that come from buying a house, or how much to budget for unexpected buying expenses. Here are some budget tips that can help you stay on top of your finances during the buying process:
1. Ready your ready money.
When you look for a home and find one you like, you will have to submit a certain amount of ready money when your offer is accepted. This money is presented up front. For more expensive houses, the ready money can be a few thousand dollars. If you're relying on downpayment assistance, rebate programs, or relatives to help with your downpayment, you might not have expected this initial cost. However, you should know that the ready money you put down for the offer contributes to the costs and downpayment you pay at closing.
2. Don't buy at the top of your price range.
When buying a home, you get pre-approved for a mortgage by your preferred lender. This lender gives you a budget of how much they are willing to finance. However, you should not buy at the top of your budget because this means higher payments, and many lenders approve more than you can actually afford. Meet with a mortgage broker to get a real look at all of your expenses, and then figure out how much you can afford to pay each month.
3. Factor in insurance and property taxes.
Your mortgage payment will not just include your house and interest on the loan. It will also often include taxes and insurance. These are held in escrow by the lending company who pays them for you when they are due. The tax assessment and the insurance for a home can make a monthly payment much higher. You can try to find homes that are smaller and less costly to insure to help you save money on your monthly payment.
4. Be prepared for small expenses during the financing process.
You may have to pay a few extra costs as your loan is being processed. For example, if you get an inspection on house as a condition of your offer, you will pay for the inspection out of pocket. You may also have to pay for the appraisal before closing.
For more information, contact a real estate agent in your area.
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