Darin and Christina Cunningham | Re/Max Elite
278 Franklin Road Suite 190 | Brentwood, TN 37027
Office: 615.661.4400 | Fax: 615.661.4115
Christina: 615.394.4168 | Darin: 615.456.4086

Ready to Buy a Home? Tips For A First Time Home Buyer

Owning a home brings a unique sense of freedom and pride that is unmatched by renting. Home ownership is a step forward towards possibly building long-term wealth. There are however advantages and disadvantages to being a home owner and it’s best to proceed with caution. If think you are ready to buy a home, here are five things to consider:

Get a trusted realtor

Buying any property requires a lot of knowledge and it’s also a lot of work. You may have a picture in your mind of the type of home you want to buy. A realtor, however, has more knowledge about the market and how it operates. A trusted realtor knows when and where to buy property and at what price. Most realtors would not get duped into buying an overpriced house. Buying a home also involves a series of complicated transactions. All of which have to be completed without errors and the realtor has the experience to do all this and much more.

Determine how much you can afford

This is your decision. How much are you comfortable paying at the end of every month? Maybe you can afford a $175,000 home, but the bank representative calls you with great news that you qualify for a $250,000 loan. Don’t get too excited by this. Buying a home is not so much about how much the bank is willing to loan you.  It’s more how much you can pay comfortably.

The real estate agent, the bank and the loan officer shouldn’t tell you what you can afford. It’s up to you to decide and let them know. The best way to calculate this is to use the debt to income ratio.

Find the right mortgage

You have decided how much you can afford and now it’s time to shop for a mortgage. Finding the right mortgage requires that you to be wise. A bad mortgage can negatively affect your finances over time.

The good news is that different types of mortgages are available for different situations. Get quotes from a few lenders before making a decision. The best mortgage might not be the first quote you get. A good realtor may have some good mortgage lenders that they can refer you to.

Go through final lender costs and fees carefully to be sure you know what you are getting yourself into. Also check on the interest rates. Different lenders have different interest rates. You can save a lot of money on the life of the loan if you find a lender who is 0.5 to 1% less than the others.

Down Payment

Can you comfortably raise a down payment? Most lenders require that you raise twenty percent of the price of the home. This is the amount of equity generally required so that you avoid paying private mortgage insurance. Consider this when shopping for a mortgage and ask if they have alternatives to paying PMI if you can’t come up with the full down payment.

Use your mind not your heart

This is a financial investment, don’t get emotionally attached to a property you can’t afford. Don’t shy away from walking away from a deal if it doesn’t meet your terms.  Get good feedback from your realtor regarding how much they think you should bid on a property and be involved with the decision of what to bid on the home.

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