The process of buying your very first home is one of those times in life when you will start to feel like a financially established adult. It can be exciting and a bit overwhelming to delve into the world of obtaining your first mortgage, and there are a lot of expenses and costs to know about. Before you get started working with a real estate agent to find a home that you want to make your own, it is best to get familiar with what will be expected of you financially. Here is a look at some of the things you should know to give you a good start.
How much should you put down on your first new home?
According to The Motley Fool, first-time home buyers should have at least five percent of their ideal purchase price stocked away in a savings account for a down payment. However, this is just a baseline number; your down payment cost requirements could be a lot different depending on a few factors like the following:
Will you have to pay for mortgage insurance?
Mortgage insurance is a type of protection usually recommended to first-time home buyers who do not make a sizable down payment. A sizable down payment can mean you have enough equity in the house that you are buying to borrow more money if something happens and you get behind on payments. If you don't have that equity, there is a greater chance of missing payments and falling behind. Therefore, if you will be starting out with a lower down payment amount, your lender may ask that you carry mortgage insurance as a safeguard to protect the loan from default.
Should you have a savings designated for moving expenses?
It is actually a really good idea to figure moving expenses in with your other necessary funds like closing costs and homeowner's insurance premiums. The last thing you will want is to be approved for a mortgage, pay your down payment, and start the loan term and be so broke that you have to continue living in a rental because you can't afford to move. Think about things like the costs of renting a moving truck to transport belongings, connecting your utilities, and making necessary repairs and build a small amount of savings for those necessities.
For more information, contact businesses like Cornerstone Residential Mortgage.
Share23 October 2018
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