How To Buy A Home - Tips For Buying Your First Home

Buy A Home San Jose can be a very exciting time. You have thought long and hard about what you want your new home to look like and where it is located. Now you just need to make the final decision - where to buy, and when. Buying a home can be very stressful, especially if you have never done so before. Before you jump into the purchase process, ask yourself these questions to help you decide.

Down payment: How much money are you planning to save by paying less than the actual purchase price? Your down payment will greatly depend on the kind of mortgage you secure and the appropriate lender. Some standard mortgages aimed at good old first time home buyers allow as little as three percent down. There are buyers who will only allow five or six percent, but this still makes a huge difference in your financial plan. When you factor in the closing costs that typically come with a mortgage loan, the difference in savings can become significant.

Number of years to pay off your mortgage: How long do you think you will have to repay your mortgage? If you want to get started on the road to owning your new home, then it is important to start sooner rather than later. Typically, you should have at least five years to repay a mortgage. If you have a longer repayment schedule, you will save money over the long run, even as you continue to build equity. The sooner you start, the more likely it is that you will be able to afford a house sooner. The earlier you buy, the less you will pay in monthly payments and avoid paying mortgage debt for many years.

Debt-to-income ratio: How big of a debt load do you need to be comfortable living on your new residence? This is one of the first things that potential buyers ask their real estate agent, and it is a good question. In today's troubled economy, most buyers are concerned with paying off existing debt as quickly as possible. However, if you owe more than you could afford to pay off in two or three years, then you will simply be throwing money away every month. It is essential to set a debt-to-income ratio that allows you to comfortably live in your new home and not have to sell to repay your mortgage debt. Ideally, your new monthly payments should be no higher than fifteen to twenty percent of your monthly income.

Closing costs: Are your lender fees and closing costs going to be a deal breaker for you? If they are, then you should probably look for another lender or a different type of loan. Most buyers are used to paying property closing costs as part of the purchase price, but your lender may tack on a number of other closing costs that can drive the purchase price up substantially without you even being aware of them. The buyer's agent will know what your lender requires for your state, county, city, and local government, so you can check with your real estate agent about what the closing costs generally are for your community.

First-Time Home Buyers Tax Credit: Are you a first-time homebuyer? The Federal tax credit for first-time homebuyers was recently increased to an average of $3000. With the tax credit built into the real estate market for first-timers, there is really no better time to buy. A $3000 tax credit can significantly reduce your mortgage payment, which makes the purchase process much easier.

Real Estate Agent: Make sure that you work with a licensed real estate agent who has your best interest in mind. An agent who acts as your lender will be experienced in negotiating lower payment deals, so they will be able to help you make sure that the mortgage is affordable. An agent who represents your interests as the buyer will also be familiar with the requirements required to qualify for the loan. The real estate agent should be knowledgeable about all aspects of the process and have your best interests in mind. Working with a real estate agent will make sure that you get the lowest mortgage rate possible and that you don't have to worry about qualifying for any loans or deposits.

Closing Costs: It is important to understand the closing process. This includes the prepayment penalties, title insurance, and inspections, not to mention the actual closing costs, which can include home inspection fees and title fees for purchasing loans. These can add up quickly and it is important to make sure that you can afford them before you buy. Buyers should consider financing in order to minimize the cost of closing. If you think that you may need to use a conventional loan, make sure you shop around for the best rates and terms.