What Should First-Time Home Buyers Know
Purchasing your first home can be both exciting and stressful if you don’t know what to expect. Here is some helpful information on what first time home buyers should know that could help you in the process of purchasing a new home. This could put you in the power seat so you can be in charge of your future.
Down Payment
It’s important to be aware of the additional costs that come along when you purchase a new home. Once you are under contract to buy a new home, you’ll be asked to provide a down payment, which can be as much as 20% of the cost of the home. It’s wise to save in advance when you are considering purchasing a home.
Check Your Credit
Do you know your FICO score? Banks factor in your creditworthiness when they are approving your loan. You should review your credit report for any errors and to obtain your FICO score.
If you do not qualify for a conventional loan, there are FHA mortgages available. FHA mortgages allow for borrowers with less than the minimum FICO score to get a loan. Still having trouble getting a loan? DRB Capital may have another option, read on.
Apply for a Pre-Approval
Consider meeting with a reputable mortgage lender who will review your credit and verify your income and assets. Typically, the lender will then come back with a pre-approval of the amount of credit they are willing to lend you for your new home. Although it is not necessary to obtain a pre-approval, finding out the size of a mortgage you qualify for is a helpful guide when you start your home search. You should enjoy your new home and be comfortable with the mortgage payments.
Consider the Additional Costs
There are additional costs, above and beyond the actual sales price of the home, that could be taken into consideration if you want to be able to budget accordingly.
-
- Closing costs – Fees such as loan origination fees, discount points, appraisal fees, title searches, title insurance, taxes, etc. are sometimes overlooked when calculating how much money is involved.
- Monthly bills – To avoid surprises, you might want to estimate what your expenses will be in your new home. You won’t know exactly the amount, but you can ask your real estate agent.
- Home Owner Associations (HOA) – If your home is part of a HOA, you may be charged a monthly, quarterly, or annual fee. Consider factoring this into your budget.
- Escrow – You should ask your real estate agent about escrow. There may be expenses that are preferred to be held in escrow such as property taxes and homeowner’s insurance.
- Transportation expenses – Is the home closer or further from the places you frequent? The answer to this question could help determine if there will be an increase or decrease in your transportation expenses such as gas, car maintenance, train or bus costs. Also, consider checking with your car insurance company because your rates may change if you are moving to a different city. Often rates changes are determined by zip code.
- Furniture – A new home may need some new furniture. This is often the fun part but still requires money. Need a dinette, couch or bed?
- Unforeseen repairs – If you are looking to buy a pre-owned home, you may come across some unforeseen repair costs for things such as a new water heater, roofing, or flooring.
The DRB Capital Solution
But wait, you have other options! If you have a structured settlement or annuity you may be able to sell your future payments to a company like DRB Capital. DRB Capital may be able to get you the cash sooner than if you were to go through the lengthy loan process! To learn how we can help you get cash for your first home sooner, please call us at 877-894-4541.