How To Prepare For The Financial Side Of Buying A Home
As you decide to move on from renting and becoming a homeowner, there are some additional financial responsibilities that will come to you. Being a homeowner means owning your own land and property, but it also means being responsible for repairs and property taxes. Here are some tips to help you determine your home buying budget, get the right financing, and look for any available financial help to get you into the new home for sale that you want and need.
Analyze Your Budget
Begin by carefully looking at your budget based on your income. Make a list of all your expenses you will continue to have as a homeowner and add in any new homeowner expenses. This should include home owner's insurance premium, property tax, a monthly city water and garbage bill, maintenance and repairs, and possibly a higher utility bill. Remember to include a monthly amount to go into your savings and investments for your retirement.
After you subtract all these expenses from your income, the amount you have left is what you will have available to pay your mortgage payment. Keep in mind, most mortgage payments will include a regular amount each payment to collect for the yearly property taxes and home owner's insurance.
Once you know how much you have available each month to put toward a mortgage payment, talk to a mortgage broker of your choice to get pre-qualified for a home mortgage. This pre-qualification process will include reviewing your credit report and score to determine your credit-worthiness and looking at your income. Your mortgage broker will be able to qualify you for a mortgage with its monthly payment of taxes, insurance, principle and interest being less than 28 percent of your income before taxes. Be prepared to provide past tax returns, W-2s, and the past several paycheck stubs to verify your income.
Look for Seller-Assistance
Another way to help you buy a home is to look for a seller who is willing to help you with closing costs or credits on your purchase for any necessary home repairs. This can help reduce the amount of money you will be responsible for paying at closing and toward the entire mortgage.
You can also submit an offer on a home you like and include terms in the contract for the seller to pay a certain dollar amount or percentage of the closing costs. A seller who is more motivated to sell their home can be open to agreeing to these terms on the sale.