Life has many exciting firsts. First steps. First words. First day at school. First love. First job. The list is endless.
Every American’s dream has always been to purchase their first house. That’s a big step to take, and it requires more preparation and a little luck. Purchasing a house can also be a significant way to create wealth over time if performed correctly.
If you’re like some Californians who want to know answers to questions like who pays closing costs in California, read on. This article highlights some things you should expect when purchasing your first home.
- Expect To Set A Budget
Buying a new house will significantly affect your finances. You don’t want to buy a house that you can’t afford or one that’ll make you drain your bank account. Buying a house may appear affordable than ever, but you shouldn’t let incentives like expanded tax credit and low-interest rates to entice you to spend more than you can afford.
Set a budget that includes upfront costs such as down payment, closing costs, moving expenses, and new furniture. Also, include the homeownership costs, mortgage payments and nay maintenance fees you may need if you’ve purchased a single-family home. If you’ve bought a condo, you also need to prepare how you’ll pay the homeowner’s association fees.
- Ask Yourself How Long You Want To Live In The House
Most financial experts advise that it’s essential to buy a house you can live in for at least five years. If you intend to live in the house for a short period, you may end up not recovering the money you used to buy the house when selling it.
Moreover, you’ll use the first mortgage payments to offset the interest and not the principal. That means you’ll not have built substantial equity for your home. It would be advisable to rent a house if you want in it for a few years. Living in a buyer’s market doesn’t mean every time is appropriate for buying a house.
- Expect To Make A Down Payment
Most home sellers will expect you to make a down payment before they sell you your house. The standard down payment has always been 20%, though some sellers may charge you less or nothing.
It’s advisable not to make a sizeable down payment, though it’s also advisable not to make a tiny one. If you make a large down payment, you may lack money to pay for taxes, mortgage, and insurance. Furthermore, there may be some repair and maintenance costs which you may require to make before moving into your new home.
Your financial planner and a lender can help you decide on the correct amount of down payment to make. Consider the principal mortgage insurance you’ll pay before settling on the correct down payment. Very little down payment may make you pay insurance to protect the lending institution.
Wrapping Up
Buying a home is a significant investment that needs you to have the right expectations. It isn’t as simple as buying some candy in a shop but require you to research and consult widely. Budgeting, knowing how long you intend to live in the house, and making the right down payment may lessen your anxiety.
I’m a 20-something stay-at-home mother and wife. I have an amazing husband, a beautiful daughter, two loving dogs, and a lazy cat. I wouldn’t change my life for anything! I love to read, listen to music, cook and blog!
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