What should you consider before buying a home?
Debt & Savings
You want to make sure that you own your home and your home doesn’t own you. You want to make sure that you pay off those credit cards, car loans and student loans as quickly as possible. This ensures you can handle any unexpected expenses that come your way once you own a home. Once debt’s in the past, get busy stockpiling money for your buying expenses and down payment.
Down Payment
The best way to buy a home is to put 100% down. If paying cash for your home isn’t an option, set a goal of saving at least 10%. 20% will put you in an even better position because you’ll avoid paying private mortgage insurance (PMI). Using quick numbers 10% down for a $100,000 home is $10,000 you will need to save. See below for more information on the types of loans.
Closing Costs
On average, closing costs can range from 2% to 5% of your home’s purchase price, according to Zillow. For a $100,000 home, that’s anywhere between $2,000 and $5,000 to cover items like:
Loan origination fee
Home and pest inspection fees
Appraisal
Prepaid property taxes and mortgage insurance
Title insurance
Your lender will give you an estimate of costs after you apply for your mortgage. These fees will vary so stay in contact with your lender. You should receive your final closing disclosure form at least three days before closing. Review it for unexpected cost differences, and ask your lender to explain any new charges or charges you may quite not understand.
