February 05 2018 0Comment

First Time Home Buyers

Here’s what every first-time home buyer needs to know to buying a house with confidence and with as few curveballs as possible. Figure out how much home you can afford first before you go home shopping.

Homes can cost a bundle, so odds are you’ll need a home loan to foot the bill, along with a hefty down payment. Still, the question remains: What price home can you really afford? That depends on your income and other variables, so here’s a ballpark figure of what you can afford.

In general, most experts recommend that your house payments should not exceed 28% of your gross monthly income. So, for example, if your monthly (before-tax) income is $4,000, multiply that by 0.28 and you’ll see that you shouldn’t pay more than $1,120 a month on your home.

To get a more accurate assessment, head over to a lender for a home loan pre-approval. This means the lender will assess your credit history and other factors, then tell you whether you qualify for a loan, and how much. Home pre-approvals also put home sellers at ease, since they know you have the money to back up your offer.

Know there is no such thing as a perfect home It’s your first home and we understand if you’ve dreamed about the ideal house and don’t want to settle for anything less. But understand that real estate is sometimes about compromise. As a general rule, most buyers prioritize three main things: price, size, and location. But realistically, you can expect to achieve only two of those three things. So you may get a great deal on a huge house, but it might not be in the best neighborhood. Or you may find a nice-sized house in a great neighborhood, but the price is a bit higher than you were hoping for. Or else you find a home in the right neighborhood at the right price, but it’s a bit small, or just cozy.

Finding a home can be a lot like dating, meaning perfect can be the enemy of good. So find something you can live with, grow into, and renovate to your taste later.

First-time home buyers there are a number of tax breaks new homeowners may not be aware of. Mortgage interest deduction is a boon for brand-new mortgages, which are typically interest-heavy. If you purchased discount points for your mortgage, essentially pre-paying your interest, these are also deductible. Some states and municipalities may offer mortgage credit certification, which allows first-time buyers to claim a tax credit for some of your mortgage interest paid. Check with your local government to see if this credit applies to you.

If you can’t find a Lender or Bank willing to lend to you, consider getting an FHA loan. The Federal Housing Administration has a program that insures the mortgages of many first-time homebuyers. As a result of this guarantee, lenders who might otherwise feel queasy about your qualifications will be more inclined to lend to you. The FHA requires a down payment of only 3.5 percent so for first-time homebuyers this is great.

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