Buying Your First Home
There comes a time when you want to settle down and have a place you can call your own. A place where there are no landlords, no property management companies and no one to tell you “no.” Your first home is all these things and more, but before you make this investment, you’ll want to familiarize yourself with the costs and the process.
Do Your Research
By taking some time to complete a few steps at the beginning of the home buying process, you can save time, money, and aggravation.
Know the selling price of similar homes in your area:
Look up actual Multiple Listing Service (MLS) listings in your area. These MLS listings can be found on many different websites, including the National Association of Realtors.
Find out what your total monthly mortgage cost would be:
Factor in everything you can, including taxes and homeowners insurance. There are two ways to pay for property taxes and homeowners insurance, out of pocket, or monthly when included in your principal payments.
To get an idea of what you'll pay in insurance, pick a property in the area where you want to live and make a call to your insurance agent for an estimate. You won't be obligated to get the insurance, but you'll have a good idea of what you'll pay if you do buy. For an idea of what you'll pay in taxes, check your local property appraisers’ website.
Find out how much you'll likely pay in closing costs:
Closing costs include origination fees charged by the lender, title and settlement fees, taxes and prepaid items like homeowners insurance or homeowners' association fees. If you’re a Rivermark member, the closing costs that you’ll pay when you choose Rivermark as your lender will be low.
Review your monthly budget to determine what you can afford:
Most financial experts recommend that buyers spend no more than 28% of their gross income on housing costs. There are several things to consider aside from just the mortgage. For instance, is the property located in a neighborhood that has homeowner’s association fees? Is the county you’re looking to reside in more expensive than a neighboring county? Knowing all of the little fees that may come with your mortgage can help you determine the best options for you.
Be prepared for pitfalls:
While buying a house can be a great investment, maintaining your new property can be labor intensive and expensive. When unexpected costs for roof repairs and plumbing problems crop up, appliances break, or things need to be fixed, there's no landlord to turn to, and these costs can quickly drain your bank account.
At Rivermark, there are many ways we can help prepare you for these types of pitfalls. Products like a savings account where designated funds can be automatically set aside for your emergency savings, a home equity loan, or a credit card used specifically for emergency home repairs, can help you in times of need.
Ready for the Next Step?
Ok, so you’ve taken a financial inventory and decided that you’re prepared and ready. Congratulations! Now, let’s examine the first steps you’ll need to take before you start browsing photos of potential homes.
Get a copy of your credit report:
This is the first and sometimes most important step in knowing what type of loan rate you will be able to qualify for. A blemished credit report can stifle your homeownership plan, so it pays to look at your creditworthiness early in the home-buying process. Get your free annual credit report and look through it for errors or unresolved issues. If you find mistakes, contact the company first to see if you can rectify the issue. If this doesn’t work, or you need more assistance, call the credit reporting bureau to discuss other options.
Collect your important documents:
Before you start your paperwork, you’re going to need at least two years’ worth of financial documents. Collect your pay stubs, bank account statements, W-2s, tax returns, any statements from current loans and credit lines, and the names and addresses of your landlords for the past two years. This might seem tedious, but your lender will want to see these and it’s best to have them on hand and ready to show.
Getting pre-approved for a mortgage helps you bargain when you’re house hunting. Rivermark is a good place to start your search. We offer great, low rates, 100% financing options, along with excellent service.
Remember, a trusted lender will walk you through all of these steps and more. You can always rely on Rivermark to help you navigate new financial territory. Download our Mortgage Checklist or give us a call at 503.906.9497.