Step-by-Step Guide for First Time Home Buyers – Tips 9 thru 15
In last week’s installment we explained the first 8 tips you need to know before shopping for new homes in Frisco TX. Now we’re going to wrap it up with the final 7 tips. By the end of this post, you should have a good idea of how to buy your first home.
9. Finish saving a down payment
Ideally, you’ll aim for a down payment totaling 20% or more of the home price so you can avoid paying PMI, or private mortgage insurance. Putting more money down on your home also minimizes the amount you need to borrow. However, qualified buyers can get a conventional mortgage with as little as 3% down.
10. Set aside money for closing costs
Many new home buyers aren’t aware that fees must be paid at the time of closing on a house. These fees add up to about 2-5% of the value of the loan. They include inspection and appraisal fees, attorney fees, title insurance costs and other expenses. You may be able to get help with closing costs from the seller or from grants and assistance programs.
11. Set realistic limits
The amount of money a lender is willing to loan you isn’t necessarily the best guideline for your house-hunting budget. It’s far better to set a price limit that’s comfortable for you to repay. Use an online mortgage calculator to experiment with different loan amounts and see what your monthly payment would be. A mortgage payment of 28% or less of your monthly income will leave room in your budget for other living expenses as well as investing for retirement and enjoying some of your income with peace of mind.
12. Think about the future
Even though many people dream of buying their “forever home,” the fact is that most homes are not forever. Chances are you will sell your house at some point. Keep this in mind when shopping for homes. Buying a well-designed home in a growing neighborhood and in a good school district will increase the chances that the home will grow in value and earn you more money when you sell it.
13. Do your due diligence
When you decide to make an offer on a home, include a contingency that allows you to back out or change your offer if any major problems are found during the inspection and appraisal. The contingency clause will also allow you to use any major problems as bargaining points. You can ask the seller to make crucial repairs before closing or reduce the price of the home.
14. Prepare for the responsibilities of home ownership
Plan to budget about 2-4% of your home’s value each year on maintenance. Keep an emergency fund for any unexpected repairs. If you’re moving into a planned community, remember to budget for HOA fees, which will likely include some exterior maintenance services such as lawn care and snow removal.
15. Set up a recordkeeping system
Designate a safe place to store all the paperwork associated with your home, including mortgage and insurance documents and a copy of the deed. Ideally, you’ll keep these records in a waterproof and fireproof file cabinet or safe. You might also want to start a notebook or binder for maintenance records, receipts and the like.
Ready to buy your first home in Frisco? Landon Homes has brand new Quick Move-In homes from the high $400s-$800s available now in Lexington Frisco and Dominion at Brookhollow in Prosper TX. Call Landon Homes today at 469-804-5534 to get the latest updates on new homes in Frisco TX.
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