Buying Your First Home
Buying your first home is one of the biggest decisions you will make in your lifetime. It can be both wildly exciting and terribly overwhelming, but armed with good information, it is a decision that can be made comfortably and soundly. Before you begin to research Oklahoma homebuilders and begin the home buying process, make sure you cross the following items off of your to-do list:
1) Reduce your debt and increase your savings. Your mortgage lender is going to want to see that your money isn’t tightly tied to other debtors and that you have a significant down payment. Not only will a large down payment please your lender, but also it will either keep you from having to pay Private Mortgage Insurance (PMI) or reduce how long you have to pay it.
2) Determine – and strengthen, if necessary – your credit score. If it’s below 680, you’ll likely face a higher down payment, larger mortgage, and more sizeable fees. Having a score of 750 or above will secure the best rates, but no worries if you fall somewhere between the two numbers. You should still be afforded reasonable rates.
3) Develop a budget. Figure out how much house you can afford by comparing your monthly living expenses now to what they will be. Aside from your new mortgage, don’t forget to account for property taxes, homeowner’s association fees, difference in utility bills, maintenance and repairs, amenities such as hot tubs and pools, etc. Be realistic about it. Don’t buy so much house that all you can do is exist in it. Perhaps even try out the new budget for a few months before you find that new, green home you’ve been looking for.
4) Research loan types and closing costs. Become familiar with the details of “fixed-interest mortgage” loans, “adjustable-rate mortgage” loans, and “interest-only mortgage” loans. Each of these has very notable differences and are not suitable for everyone. Closing costs can vary widely between $2000 and $4000, depending on where you purchase. Do your due diligence ahead of time so that there are no surprises when closing day comes.
5) Obtain pre-approval for your mortgage. This lets your homebuilder know that you’re serious and able to buy, and it keeps you from wasting each other’s time. It also helps you establish your budget with your builder up front, so you can discuss upgrades and additional amenities realistically.
These first few steps are what many consider the “necessary evils” of the home buying process. Once you get through the mundane numbers part of it, though, you can move on to the fun part – choosing a neighborhood and designing your home!
Guest post by Home & Remodel sponsor, Manchester Green Homes of Oklahoma City