Buying A Home For The First Time Part 01
So, you have decided against being a renter and are looking forward to owning your abode by buying a home. You have saved some money for a reasonable down payment and have done your homework. You have assessed your financial situation and have concluded that you can afford to buy a home. This is excellent news, and congratulations. You must be proud of yourself. This article will help you further decide on the type and location of the house you want to buy while considering the amount you can afford towards making this a significant investment. This is the first of two articles to help you make the right decision when buying a house.
To be conservative is a good attitude when planning your budget. Therefore, have a maximum amount in mind to invest in your purchase based on a regular down payment somewhere between 20 – 25% of the total value of the house you have in mind. Let us say you are interested in a house with a value of $700,000.00. You need to have approximately $140,000.00 – $175,000.00 in down payment. The balance of the cost of the house you want to buy will be $525,000.00 – $560,000.00. That is, of course, the amount you will need to borrow as a mortgage loan to pay for the house.
The mortgage loan amount has to be derived from your DTI calculations, and the amount of the down payment must be in cash or convertible to cash in a brief time. Some new home buyers have stocks that can be converted to cash once the stocks are sold. Make sure you have evaluated your capital gain taxes if any, when selling any stocks or any investment that has capital gain taxes affecting it. You certainly do not want to owe the government more money in capital gain taxes than you can afford.
Setting an amount as your maximum budget and adhering to it will help you protect your investment and secure your financial situation. Do not exceed the budgeted amount, thinking that some miracle will happen along the way, and you will have more money to take care of an over-budgeted purchase. Therefore, if your set budget is $700,000.00 as per our example, start looking for properties that are valued at 10% lower than your budget. Therefore, you should start looking for houses valued at around $630,000.00. If you can find your dream home at this budget, then great; otherwise, you can increase your budget up to the pre-set budget of $700,000.00.
The first important factor to consider when looking to buy a house is its location. Houses in good locations maintain their value and increase the value more likely than houses in less favorable locations. Find the best location you can purchase a house based on your budget and start searching for houses that are placed on the market for sale in that location. You also need to create a wish list of the things you want in a house according to the number of family members and their needs, such as distance to school and work.
In the following article, we will continue providing new home buyers with information to help them make a better choice to buy their first home.
Amiri Realty and Rockstrong are your one-stop-shop for all your real estate, mortgage loan, construction, and remodeling requirements. You may contact us for additional detailed information, and we will spend the necessary time to provide you with helpful consultation if you are thinking of selling your home. We serve you better.