Home Ownership- Ready or Not?

​Buying a home is likely the largest, or one of the largest, purchases you will ever make. No pressure. Having your own four walls and a picket fence is the goal, right? We are here to make sure you are ready for this big venture.
 
As a first-time home buyer, there are many expenses that you incur not only in the buying process; but, you will also have several extra expenses after the closing date. The goal is not to go into mounds of debt to buy and maintain your home. So, let’s talk about home buying and see if you are ready:

Pre-approval

• Before you begin dreaming of your first home, find a financial institution to stop by to find out the interest rates and mortgage options you will have. They will tell you how much of a mortgage you qualify for. The best advice: DO NOT take all of that money. (Ever heard of house-poor?) Simply calculate the monthly payment you are prepared for and try to stick with your plan.

Interest rates

• There will be a multitude of interest rates thrown at you during this process because there are a multitude of mortgage options. Try your hardest to go for the lowest interest rate even if the monthly payments are higher. Why? Because, you will be paying less in the long-term.

Down payment

• Putting a down payment on your house is always encouraged to have a lower monthly payment, but it is not required. Some mortgage providers will offer 100% financing, which allows you to put cash toward other costs on the house. Many mortgage providers or brokers will charge PMI, which is insurance for the lender, when the down payment is below 20%; PMI will add to your monthly payment for several years. However, some financial institutions, like eCO Credit Union, do not charge PMI whatsoever! Do your research and make sure you’re getting the best option for your situation.

 Closing costs

• You’re probably thinking, “There’s more?!” Unfortunately, yes. Closing costs are some of the most unexpected and unplanned costs by first-timers. Not only are there inspections that come with the contract phase, but you will have to agree on a day to meet with the seller of the home you are buying (closing). The costs go towards the person/place that is facilitating the mortgage and the lawyer that will help you sign papers on closing day. Luckily, if there are realtors involved, the seller will pick up the tab for that. And sometimes, you can even negotiate to have the seller help with closing costs!

Maintenance and Utilities

• Typically, rent will cover things like pest control, outdoor up-keep, and major repairs for your home. But, (you guessed it) this is all on you when you choose to own a home! This should make you think twice about buying a house with two A/C units, a large yard, and older appliances. Do you have the money saved to buy lawn equipment or pay someone to maintain your property? Do you have an extra $300-500 budgeted per month for your utility bills? Do you have money saved up in case the A/C unit goes out or the roof needs replacing?

Home buying and ownership is a commitment going well past the purchase price. Are you ready to learn more about home ownership? We have free five-minute lessons in the ēCO Educational Center that will teach you more about home ownership here. Or, if you’re curious about saving more, check out our list of lessons available- all online and all free.