Knowing what kind of home you can afford and your budget will make buying your home easier. When you understand how much your home will cost you, both monthly and up-front, you can pick the right home for your family. Your budget matters when buying a home.
The first step is to determine what you can afford every month. Get your bills together and develop a budget that you’re comfortable with, allowing for savings and some breathing room in case of emergencies. Then talk to your lender about what kind of home you can afford with this budget, including all of the costs of home ownership.
Make sure that you budget in everything – including property taxes and insurance. Your lender will be able to help you determine these before you sign anything. Depending on the area you live in, you may not pay these monthly, and could pay in a lump sum, so budget accordingly.
Make sure that you have the cash on hand that you need for closing, as well. You’ll have to pay a down payment and the closing costs. You can pay anything from 0% down in a VA or USDA loan, to 3.5% down for an FHA loan, or 20% down for a conventional loan. If you pay under 20%, you’ll need to budget for PMI (Private Mortgage Insurance) as well. Closing costs include loan origination fees, title insurance, and appraisal fees, and could run you 3-7% of the total loan amount.
Knowing the utility history can also help you budget for the future. If you’re moving into a new home that’s bigger than what you’re used to, in a different climate, will change what you pay in utilities. Check into what people in your area are paying. Call the utility company and ask them. Just know what you’ll be paying.
That goes for other expenses like moving, HOA (Homeowners Association) and maintenance costs that may crop up. Just keep an eye on what you’re paying every month and make sure that it’s something that you can afford comfortably. The most important step though is…
Get pre-approved! Getting pre-approved for your mortgage is the most important budget step. Knowing what number you can hit is vital to making an offer for your home. It’s having a weapon in your back pocket that other shoppers may not have.
If you’re ready to get pre-approved for your mortgage now, call us in St. Louis at (314) 781-9700, Chicago at (773) 770-4727, Indianapolis at (317) 550-1515 or Nashville at (615) 810-8555. You can always apply online at www.thehomeloanexpert.com, and we’re also open on Saturdays to better serve you. We work hard to make it easy on you. Nobody gets lower rates on better loans than The Home Loan Expert, Ryan Kelley, why go anywhere else?