 |
 |
 |
|
Tips For First-Time Homebuyers
|
|
 |
|
 |
Considering Your Options
If you’re just beginning to think about buying a home, learn more about the pros and cons before you make this exciting commitment.
» Owning vs. Renting
» Are You Ready To Buy?
» How Much House Can You Afford?
» Recommended Reading
Owning vs. Renting
If you’re currently renting and have discussed the possibility of buying with your friends or family members, no doubt you’ve received advice from each end of the spectrum and everything in between. But it’s your money and your future, so weigh your options carefully and get as much information as you can!
Some of the advantages of renting include:
- Less expensive. Owning a home comes with a number of monthly and yearly expenses, such as insurance, property taxes, and repairs. As a renter, these expenses are not your responsibility.
- Predictability. Because none of the unexpected expenses of homeownership are yours to worry about, you’ll have an easier time creating a reliable budget.
- Freedom. With a renter’s lease, you’re free to move once the lease is done. Noisy neighbors? Move!
- More available money. With few house-related expenses, you’re free to do what you want with leftover monthly income.
Some of the advantages of owning include:
- It’s all yours! As the house’s owner, you can paint, wallpaper, drywall and tile to your heart’s content. Get a swimming pool and a dog!
- Equity. Does equity seem mysterious or meaningless to you right now? Building equity through homeownership opens endless financial doors.
- Stability. When you own your home, it’s always there to come home to.
- Tax breaks. The federal government has written tax laws that encourage homeownership. Reap the financial rewards of tax breaks!
Back to top
Are You Ready To Buy?
Aside from emotionally preparing yourself for the possibility of homeownership, you should also take a close look at the state of your finances.
Be certain you get a credit history report for yourself, which can be easily obtained through a number of online resources inexpensively--and even for free. Fix any inaccuracies immediately.
Do you have enough cash on hand to deal with the up-front costs of buying a home, as well as the down payment? These expenses often cost thousands of dollars, depending on the home you purchase.
Finally, be certain you understand what you’re saying and hearing. Feel free to refer to the online Glossary of Terms provided on this website.
Back to top
How Much House Can You Afford?
In attempting to determine how much house you can afford, take into consideration the following expenses:
- Up-front costs, processing fees, appraisals and inspections, insurance and additional miscellaneous expenses
- Down payment
- Closing costs
- Interest rate and Annual Percentage Rate (APR)
- Mortgage principal
- Post-purchase expenses such as remodeling, property taxes, and home insurance policies
Most of the expenses listed above depend upon your income, monthly expenses and any debt you now carry. Learn more about the math behind the Housing and Debt Ratio.
In addition, the house you choose and the neighborhood where the house is located will change the amount of house you can afford.
Visit our Tools & Calculators for Buyers to simulate what a loan might look like for you.
Back to top
Recommended Reading
The following books are just a few examples of the wealth of information available today for first time homebuyers.
- “100 Questions Every First-Time Home Buyer Should Ask.” By Ilyce R. Glink
- “Home Buying for Dummies.” By Eric Tyson and Ray Brown
- “Mortgages for Dummies.” By Eric Tyson and Ray Brown
- “The Everything Homebuying Book.” By Mark B. Weiss
- “Buying Your First Home! 2E.” By Robert Irwin
Back to top
|
