Five Financial Tips to Afford Your First House

Saturday, December 6, 2014, 7:00 AM | Leave Comment

Buying a home is an excellent way to build financial stability if you can afford the mortgage payments, taxes, and other costs that make owning a home more expensive than renting. The following can help you break the cycle of renting, without breaking your bank account.

Five Financial Tips to Afford Your First House

  1. Meet with a Mortgage Lender Before Looking at Houses

    Often you can be pre-approved for a mortgage loan, which will streamline the process leading to you signing the documents that make the purchase official.

    More importantly, being pre-approved will help you determine which houses fall within your price range.

    Otherwise, you risk settling for a shack in a bad neighborhood, or committing to a dreamy 3,000+ square footer in the ‘burbs.

  2. Optimize Your Credit History

    Meeting with a lender beforehand also primes you to consider your credit history from a lender’s perspective while giving you time to address issues, like heavy usage of revolving credit, that could stand between you and a low interest rate, costing you thousands of dollars over the life of your loan.

    You may need to make some compromises, but it will help you to know where you stand.

  3. Determine What You Can Spend Each Month

    Mortgage lenders have experience examining your account balances to come up with a loan obligation that looks good on paper, but you’ll be the one responsible for monthly payments.

    Be honest: Have you been cutting corners to make ends meet? Keep in mind that the lender always returns to collect his dues, and plan accordingly.

  4. Consider Your Down Payment

    Your down payment can influence whether you’ll be required to pay for private mortgage insurance (PMI). As a first-time home buyer, you may qualify for government programs that cover the cost of PMI.

    Alternative options include obtaining a monetary gift or taking out a second loan. 20% down is enough to avoid a PMI, and your mortgage lender will have specific information pertaining to your circumstances.

  5. Plan for Unexpected Expenses

    When buying an older house, there will almost always be costly repairs—roofs, faucets, or even electrical work. Even if you build new from Perry Homes, you may discover glitches that need attention.

    Moreover, all houses need maintenance and upkeep. Budget for this early, so you can fix problems before they become unmanageable.

Following these suggestions will help make home ownership not only an affordable alternative to renting but also a wise investment for the future.

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