A New Home And Your Responsibilities

Couples who are seeking their first home can get caught up in the excitement of owning their first home and not pay close attention to details. The first hurdle is the down payment. Most lenders require a 10% to 20% down payment toward the purchase price of the home. There are programs for first time home buyers which may waive the down payment or make it considerably lower.

First time home buyers may qualify for government insured loan programs which may waive or reduce the required down payment. Since the government wants to encourage home ownership, their credit score requirements may not be as strict as those of banks and mortgage companies. You still may qualify for a lower interest rate. Try to find a mortgage payment that won’t strain your budget. Paying a mortgage is an investment in your future, paying rent is not.

Before looking at potential homes, set a budget. Don’t go over budget when looking at homes to buy. When the realtor says I know the perfect place and it’s only a little more than you want to spend, tell them in that case it isn’t perfect. Realtors make their money on commissions and want to sell you the most expensive house possible. Stick with the budget and don’t let the realtor talk you into a home you can’t afford. Don’t even look at a home you can’t afford. Remember that most homes may need some repairs after you buy them and set some extra money aside.

Never jump into a contract without knowing all the facts. You will need a title search and a home inspection on any home you consider buying. Generally the buyer must pay the fees for these services. Check around for the lowest mortgage interest rates you can qualify for to save thousands over the life of the loan.

Take a look at the required deposit and the disadvantages of having insufficient funds for the deposit. If you do not have the amount, the lender will slap on the insurance fee on the mortgage, increasing the mortgage amount by as much as $20,000. A no deposit mortgage may be tempting for professionals who can service the mortgage but cannot save for a deposit. Take note that these no-deposit loans have more requirements and there are still the standard fees to pay.

The closing costs include the origination fee from the lender, the cost of title search and any other necessary fees that must be paid by either the buyer, the seller or both before the sale is final. If the home requires repairs, the lender may require that either the buyer or seller set aside funds in an escrow account to insure the repairs will be completed. Be prepared for disappointment. Your lender may find a problem with the home and decline the loan for that reason. VA and HUD insured mortgages have strict regulations for the homes they will finance.

It is possible to compare the terms offered by different lenders online. There are websites that offer mortgage comparisons as a service to the public. The best mortgages for most people are fixed rate mortgages of 20 or 30 years. Adjustable rate mortgages can cause your monthly payments to go up suddenly, and balloon mortgages can cause refinance problems later.

Once you have looked into the financial aspects of buying a house, you are ready to start looking at houses. Make sure you understand what your monthly payments on any given house will be before you decide it’s your dream house. Not all dreams are pleasant and you don’t want to end up with a nightmare.

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