5 Tips for First Time Home Buyers
Thinking about breaking into the market for the first time? Are you sick of paying rent? Are you overwhelmed by the conflicting national news stories?
Buying a home for the first time can be emotional, confusing & overwhelming. It can also be exciting, fun & liberating.
1. Understand the Finances Behind Home Ownership
When you think payment think P.I.T.I. which stands for Principal, Interest, Taxes & Insurance. The best way to understand a full monthly payment is to contact a good mortgage representative, local bank or credit union. By understanding your maximum monthly payment you can determine a purchase price which can help narrow down your location.
2. Get An Idea of How Much in Closing Costs
You want to know exactly how much you need to close on a property. This is another place where your mortgage lender will come in handy. They can determine by your savings, income, debt & credit score the best mortgage program for you & provide you with an estimate of closing costs. This can be a guideline for a budget (in order to save) or reinforcement that you are ready to take the plunge.
In a city like Philadelphia each neighborhood has it’s own unique flavor. Go to brunch, walk around, talk to people & go to Open Houses. You might find a neighborhood that’s been completely off your radar may be the perfect place to start your home search. Websites like Trulia & Zillow can offer information on what’s for sale & what has sold which can give you a general idea of what you are looking at spending for what. These websites are not a substitute for concrete & correct information from a local professional.
4. Contact a Realtor Who is a Local Expert
Real Estate is a hyper local industry. When I hear the national media outlets painting the picture with broad strokes, I cringe! Contact someone local & find out what is going on in the neighborhood you are interested in. Even if you are a year (or two) away from making a decision have them set you up to receive updates on your area of interest. This way you can keep your eye on what is coming onto the market as well as the price points.
Most lenders will advise not spending more then 28% of your income on housing. Any more could leave you house poor & nobody wants that. This can also help you in creating two savings accounts. One to cover your down payment/closing costs & another for your reserves.
Remember, this is a VERY personal decision. Even if you are hearing everywhere that NOW IS THE TIME TO BUY; it may not be the right time for you. Or you may be hearing that now is a terrible time to buy, however, you may feel ready. The right time is the time that is right for you. If you have any questions about the information above please contact us! We love to help!