Buying your first house is a huge decision and there are multiple factors to consider. This article will outline 5 questions each future homeowner should ask.
How long do you plan on living in the home?
Americans usually live in homes for about seven to nine years. Each future homeowner needs to decide if they plan to move in just a few years or stick it out for the long haul. Usually, the shorter amount of time that you live in a home, the less time your home has to appreciate in value. Also, in a market where home prices continue to decline in certain markets, future homeowners need to assess the risk of a short-term buy. The length of time future homeowners plan to live in their first home will impact the mortgage option of best fit. Homeowners that stay in their homes for more than 10 years, a long-term fixed-rate mortgage might be the best choice. If you know that will be imminent within 5 years then an adjustable rate mortgage or ARM might be the best choice. There are many options to choose within these basic categories. Talk with your mortgage professional about the other options available and the loan products they have access to.
Will the home you are about to buy meet your future needs?
Many life changes can affect the first time home buyer. Some will plan to have kids within the next couple of years. Do you plan to start a business and run it out of your home? These types of questions need to be asked prior to taking the plunge. Be sure that the home you purchase will meet your needs for years to come. In other words, you don’t want to outgrow the house too fast.
How do your finances look to lending institutions?
If you have more issues on your credit report, many lenders will still provide you with a home loan, but because you are more of a lending risk, you will have to pay higher interest rates and fees.
Where do first time homeowners find the down payment and closing costs?
Most homebuyers need to pay for the down payment and closing costs to complete real estate financing. Usually, you do not need a large down payment if credit scores are high. Multiple mortgage options offer a zero down and low down payment home loans If you have less than perfect credit, coming up with 10-20% of the property cost for a down payment will open multiple mortgage options. In a slower market, many homebuyers will negotiate that the seller pays for all closing costs.
Do you know what the ongoing costs of home ownership are?
There are multiple ongoing costs of homeownership that need to be considered. Some of these costs include maintenance, improvements, insurance, taxes, HOA fees, and more. If you are concerned about these costs, you may need to look for home loan options that minimize fees and lower mortgage payments. Make your realtor and mortgage lender aware of any concerns you have.