You’ve spent years repaying a lease and are ready for something more permanent. First-time homeownership provides valuable tax breaks and an opportunity to start building equity. However, purchasing a property is a significant, long-term financial decision that isn’t just about numbers. If you’re gunning for a space that is genuinely yours, ask yourself the following questions first.
Things to know before you purchase your first home
- What is My Income? It should come as a no-brainer that a sufficient income is a must when it comes to financing a home. Whether a full-time office employee or work-from-home freelancer, take note of your monthly earnings in a ledger, you can access easily. When crafting a budget with a lender, take into consideration your projected monthly bills and additional maintenance expenses.
- What Will My Lifestyle Look Like 5 Years from Now? Perhaps you’re moving to accommodate a brand-new career or itching to start a family with your partner. Consider your short-term goals and whether you anticipate any changes within the next five years. Unless you’re planning to renovate a smaller home for equity, consider whether it’ll make more sense to wait.
- Where Do I Plan to Move? Narrow down your house-hunting to a shortlist of neighborhoods. If you’re familiar with a particular region, moving there will be a piece of cake. If you’re relocating somewhere entirely foreign to you, it’ll pay to explore the area before doing so.
- How Creditworthy Am I? While you may meet a lender’s overall eligibility criteria, an attractive credit score can help you obtain the best possible interest rates and loan terms. If your credit history isn’t looking as healthy as it could be, pay off outstanding debts, keeping tabs on your credit balance. Fortunately, there are a variety of programs available to those who fall within a particular range of credit scoring—if you’re unsure about where you stand, consult with your loan officer.
- How Big a Down Payment am I Ready to Provide? Nowadays, first-time homebuyers need not adhere to the traditional 20% down payment. In unique cases, lenders will cater to borrowers who can only pay little or no cash out of pocket. That said, making a 20% down payment can improve your loan terms in the long run. As a rule of thumb, pay what you can afford—unless the benefits outweigh the hefty cost.
- What Questions Do I Have? A reliable realtor or loan officer won’t hesitate to answer your questions. If you’re seesawing between whether or not now is the right time to buy, come up with a list of five to ten of your most burning questions.
First-time homebuying is a life-changing decision for both your family and financials. Taking into consideration your numbers, future goals, location, and financial capabilities can help inform your decision and level your expectations.
Buy your first home in Royal Oak Michigan
At Mortgage City, we’re more than happy to answer your home-lending questions and stand in as your go-to direct lender. Our streamlined application and approval processes allow for quicker closing and flexible ownership. Yearning to get your hands on the right property? Let’s have a chat! Please contact us today at (248) 930-8709.