Most buyers think about the obvious money matters, such as how much the monthly mortgage payment is going to be, what the terms of the loan and interest rate are, and how much it will cost to move
Money Matters: How much money should I save?
Buying a new home is not quite as simple as looking at a price tag and expecting to pay what the seller is asking. There are other costs involved you need to know about.
While all of us have a typical budget in mind for a new home purchase, whether it is $200,000 or $4 Million, the best way to determine what you can reasonably afford is to start by getting prequalified with a trusted mortgage lender. Often this starts with filling out an online application and submitting it to the lender, who will follow up with more questions and provide you details you need to know before starting your home search.
Once you have been pre-qualified, remember that the number the lender gives you is your MAXIMUM qualification. For instance, if he/she says you are qualified for $350,000.00, you should look for homes around $325,000 or below.
Because you will need room in your budget for additional fees including closing costs, which typically include a number of fees, taxes, insurance, etc.
A lot of first-time homebuyers qualify for FHA loans, which typically require 3.5% down, while conventional loans typically require at least 20% down. When you are trying to budget for the other fees and costs, I advise my clients to save an additional 4-5% for closing. This will pad your budget nicely to cover the costs of home buying.
However, your lender will be able to give you exact amounts, based on your credit, mortgage rates, price of purchase, etc.
Lastly, don't make any major purchases once you start looking for a home. Don't buy a new wardrobe, car, cruise to the Bahamas, or that 90-inch LED TV you've always wanted. All of this will affect your loan qualification. Keep your bank statements as clean and robust as possible until after closing, just to ensure your best chances of qualifying for your loan.
For other tips and information, please don't hesitate to reach out to me. My role is to help YOU find your dream home and make it as stress-less as possible. Because YOU matter!
With over 25+ years as an entrepreneur, founder of three non-profit organizations, award-winning philanthropist, and best-selling author, I have added real estate to my portfolio of expertise simply b....
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