Buying a home is a major accomplishment and something to be very proud of. Thou before doing that you really need to take a look at your financial situation. So it got me thinking before buying a home what questions should you ask yourself. And here are the 8 serious questions I came up with to ask yourself before buying a home:
How much Home can I Afford? – As a mortgage banker I can tell you there is a difference between how much home you are pre-approved for and how much you can afford. The amount of home you are pre-approved to buy is based on mortgage guidelines and takes into your income and debts. The amount you can afford needs to be your personal guidelines on how much you feel comfortable paying each month. Maybe you base this on how much home you need, how much the new payment would be vs your current rent payment, etc. A mortgage banker I can help you in guiding you to an answer, but only you know how much you can “afford”.
Do I have the amount of money need for my Down Payment?- When buying a home you want to make sure you have your down payment. Do not start looking at home’s without this, otherwise you are putting the cart before the horse.
Where will I get my Down Payment from?- If the answer to #2 is no, then you need to think of where you will get your down payment from. Can you withdraw it from your 401k or retirement account or maybe get a gift from family? If the answer is no to these options then you will want to come up with a strict saving process to save the money needed for your down payment.
Did you find the right Mortgage Lender?- The biggest advisor in getting the right mortgage is your mortgage professional. They can help you decide which mortgage and down payment is best for you. Make sure you do your research on your lender and are they easily available. The last thing you want to have happen is you find the right home but you cannot get ahold of your lender for an estimate for that home. Make sure your lender also gives you your mortgage options and the benefits of both. And go over the negatives. If they just say “hey, you are pre-approved go find a home”, this is most likely not the best lender for you.
Did you find the right Realtor?- Just like #2, you need to do your research. Is the realtor familiar and educated on the area you want to buy? Are they trying to show you homes outside of your comfortable level? Can you get a hold of them easily?
Should you include your taxes and insurance in your payment? – On a conventional loan with a 20% or more down payment, you can waive your escrow account. This means you would pay the real estate taxes and home insurance when it is due. Vs it being collected in your monthly mortgage payment and paid by the mortgage lender when the bills are due. If you get a yearly bonus maybe waiving the escrow account works for you. Thou if you don’t receive a large year end bonus, keep in mind this is a lot of money to pay when it is due.
How much Down Payment works best for me?- Keep in mind that the min down payment, does not mean that is the right one for you. You will want your lender to go over your down payment options. A higher down payment will give you a lower monthly mortgage payment. Or a lower down payment will allow you to save money for remodeling, furniture or items needing repair. And you never want to be “cash poor” incase of an emergency. Only you know the answer to this question.
30yr vs 15yr mortgage, which one is right for me?- Choosing how long your mortgage will be also determines how much the payment will be. A 15yr mortgage maybe the way to go as the rate will most likely be lower vs a 30yr mortgage. Thou the 30yr mortgage will have a lower payment. Things to think about……
Buying a home is a major and exciting decision. But before you jump into buying a home make sure you ask yourself these 8 serious questions, so that you are better when you find your Dream home.
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