Buying a home is like a rite of passage. If you have reached a point in your life and in your financial career where you are ready to buy your first home, you may be a combination of emotions and feelings. While it can be a really fun and exciting time, it can also be stressful and overwhelming to think about putting all of your money into one investment. To ensure that you are making the right financial decision, there are a few things that every first-time home buyer should know.
You Don't Have to Have 20% Down
When your parents or grandparents bought their first home, they may have only been able to do it with a conventional loan that requires 20% down. Although having 20% down on a home is ideal, it's not something that's feasible for everyone. Luckily, there are now both conventional and federally funded home loans that allow homeowners to put down as little as 4% down on their house, which frees up a lot of people to buy a home. Just remember that if you don't do a conventional loan, that you will typically have to pay mortgage insurance every month which can be several hundred dollars.
There Are Closing Costs and Fees
In addition to saving for your down payment, you will also need to have enough money set aside for closing costs and fees which can be several thousand dollars. If you are worried that you are going to have a hard time paying for the closing costs in addition to realtor fees and your down payment, then you may want to negotiate the fees into your contract with your seller. For instance, when you are making an offer, you can say that you'll pay full price but that you want them to pay all of or half of the closing fees, which can free up some money for you.
You Can Lock In an Interest Rate
Interest rates are constantly fluctuating, which can be either a good or a bad thing for you as a home buyer. Because interest rates are especially low right now, you shouldn't have much to worry about, but you still want to watch them. A lot of home lenders will be able to lock in a low interest rate about 30-90 days before you close on your house. If you run into issues with the purchase of the home, with your loan, or with anything else, you may risk losing that low of an interest rate. However, if interest rates continue to get lower, then you won't have to worry about missing out on anything because your lender will always get you the lowest rate that you are eligible for.
Contact a company like Canyon Real Estate LLC to begin looking for houses for sale.