5 financial tips for buying your first house
Apartment life can be stressful. The smell of cigarette smoke drifts from the neighbor below you, and the dog across the hall continuously yaps. The maintenance team seems unwilling to fix your garbage disposal, and the kids at the pool splash water onto your dry towel.
OK, it’s not always that bad, but maybe you’re thinking it’s time to transition from an apartment to your first house. Are you financially prepared? Before you make a move, consider this advice from two highly rated real estate professionals.
1. Do your research. Kelly Clevenger, a highly rated Realtor in Knoxville, Tenn., says he advises his clients to meet with a lender so they can look at their credit, debt and cash reserves to determine what kind of loan they can get. “That process dictates the interest rate and gives the potential buyer an idea of what their affordability is and what price range to look in,” he says.
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2. Build up a nest egg. Natalie Amento, a highly rated Realtor in Longwood, Fla., suggests saving up more money than what you need to cover the down payment and closing costs. She says once you move in, you’ll want to change things or buy new furniture to fill space. She also says many of her clients don’t consider the costs to maintain the home. “The biggest shocker is how much lawn maintenance comes with owning a house,” she says.
3. Decide the duration of your stay. Clevenger says you also should consider the cost of moving from your first home. You’ll have to pay Realtor fees and other closing costs if you sell the home. He says if you plan to move a couple of years after you buy, there won’t be enough equity built up to cover these costs. You may have to pay some out of your own pocket.
4. Put 20 percent down. Both Clevenger and Amento recommend saving enough to cover 20 percent of the home’s value as a down payment, if possible. They say you’ll have lower monthly payments the more you put down and, if you put 20 percent down, you may not have to buy mortgage insurance.
5. Be in it for the long haul. Amento says you have to be up for the commitment of owning a home because it won’t take care of itself. That means sacrificing weekends to catch up on maintenance work. “It’s like marrying your house. It will be the love of your life,” she says. “There will be good and bad times, but it’s all worthwhile.”