Buying a home is a time of tremendous excitement and opportunity – but it should also be a time that you prepare for in advance so that you will not experience many bumps in the road, and will be far more likely to actually snag that house of your dreams! Although it is tempting to search for a house first (and there is certainly no harm in looking at what is available) your first priority during this time should be getting your financial affairs in order. After that’s done, when you browse, you can be far more serious about it, because you will know that you are qualified to buy!
Three Financial Tips For First Time Home Buyers
- Pay down other debt
- Calculate home much you can afford to spend on a house
- Save For A Down Payment
The first thing you will want to do is pay down other debt – that includes credit cards, auto loans, medical bills, and pay as much of your student loans as possible. This may seem very difficult to do, but it’s far easier to do it before you own a home, and it puts you in a good position to qualify for a loan. For starters, it makes your credit score increase dramatically, which is important for any home buyer. Secondly, a lot of people have a false belief that if you are paying $1200 a month in rent, you’ll have no problem paying $1200 a month on a home mortgage. Unfortunately this isn’t true – when renting, things like maintenance and upkeep of a lawn are paid for, and some of your utilities may be included. When you own a home, you need to pay you everything that malfunctions, needs upgraded, and all the tools that are required to maintain the home and lawn. It averages out to quite a bit more, so you’ll want to have those funds available if needed.
Financial experts say that in order to maintain financial health, one should spend no more than 25% of what they make monthly on a mortgage. So, if you bring home $4,000 a month, you should not take on a mortgage that is more than $1,000/month. If you have absolutely no other debt you may be able to extend this to 30%, but any more than that may leave you in a precarious situation. Home maintenance isn’t cheap and you may need to pay hundreds within a short period to repair plumbing, roofing, and other essentials that wear with time.
Saving for a down payment is the smartest way to go about securing a loan. With a down payment of 10-20%, you will have a lower monthly mortgage payment, and a bank is more likely to give you a loan. It also helps you become disciplined about spending and saving money. 10-20% sounds like a lot of money, but when you consider that a home is an investment, that is money that you are investing, and thus won’t be needing a loan for, so no interest will be paid on it. The bigger the size of your down payment, the better.
Are You thinking of buying a Home in Tampa Bay?
Use our site to search homes for sale in Tampa Bay and all of our surrounding areas. Unlike the “big name” sites out there, our site is directly connected to our local MLS and is updated EVERY HOUR. By creating a Property Manager account you can stay on top of the newest homes for sale and get Price Change alerts so you can stay ahead of other buyers and beat them to the BEST deals!
In the meantime, check out these 1 click searches: