Home Purchasing

Home purchasing is one of the biggest invests you’ll most likley have, and it’s important to make sure your financial house is in order. Start by reviewing your bank accounts and billing statements to get a handle on how much money you’re making and spending each month. If you’re planning to buy a house with someone else (like your spouse), review their finances as well

How much you need for a down payment depends on the type of loan and how much the house costs, but the more you can put towards a down payment, the lower your monthly payment can be and the more you’ll save on interest. Conventional loans typically require a down payment of at least 5% of a home’s price. FHA loans require as little as 3.5%.

Along with your down payment, you’ll have to pay closing costs, or fees associated with processing and securing your loan. These can vary depending on the price of the house and the type of mortgage, but estimate between 2% and 5% of the home’s value.

An approval is a lender deciding that, based on the financial information you provide, you’re a good candidate for a mortgage. In the approval, you usually get an estimate of your loan amount, interest rate and what your monthly payment could be.  A mortgage approval will help you estimate your monthly payment and understand what you can afford. This is a where you’ll start on your home purchasing mission.

Searching online and exploring the neighborhood you want to live in can be a great start. Your real estate agent will also point out homes that match your goals and can help you keep an eye out for new homes on the market.

If you decide to make an offer in your home purchasing mission, a home inspector will complete a more thorough review of the home, but there are some potential red flags you can look for upfront yourself:

• Plumbing and electrical issues – Check all the light switches and electrical outlets. Make sure the faucets and toilets don’t leak, and look for evidence of water damage on the floors and ceilings.
• Old appliances, chimneys and gas furnaces – If these items are older or haven’t been serviced recently, you may need to have them cleaned, repaired or replaced after buying.
• Radon, lead paint and carbon monoxide – Ask the seller if the house has been tested for any of these. If it hasn’t, you can have these tests done as part of the inspection.
• Full or defective gutters – If the home’s gutters are full or not working properly, they may be allowing rainwater to pool near the foundation of the home. This can be an expensive problem to fix.
• Tree location and quality – Try to assess the likelihood that a tree might fall on the house during a storm or strong winds.