Friday, May 21, 2021.
Everyone wants to buy a house and be the owner of whatever small/big property they can get. Although the idea sounds encouraging to many, only a few buyers bear the costs of a new home. Perhaps, that is one of the biggest reasons why most homeowners get surprised during their house-hunting period.
The expense of lifestyle is rising. According to the National Association of Realtors; the average existing single-family home sales price has increased around 18.4 percent to $334,500 in March. As per Unison’s 2019 Home Affordability Study; saving for a down payment for a house takes 14 years nationwide in the USA.
According to USA TODAY Housing and Economy reporter Swapna Venugopal, “experts suggest you should not allocate more than 30-percent of the overall income on housing expenses, as a general rule of thumb. This is because housing expenses cover costs such as; mortgage interest, real estate taxes, and repairs, besides the original mortgage payment.“
Tips to Save:
Here is a small list of financial tips that could help you save money to achieve your goal. We will also be discussing some upfront costs you can expect while buying a home in today’s market.
The Three Essentials:
An excellent idea to start raising money for your home is by managing your income, savings, and good credit simultaneously. Take a good look at your assets and your ability to buy before clicking on the first listing or calling a realtor.
According to Omer Reiner, a licensed Realtor and Leader of FL Cash Home Buyers LLC in Florida, “you should have stable jobs, some funds set down, and be able to secure a decent mortgage with an outstanding credit score, before buying a house.”
According to Equifax, a decent credit score ranges between 670 and 739. “It relies on the provider, but if you’re talking about getting pre-approved for a loan, a score closest to 700 is ideal,” Venugopal says.
In addition, according to Reiner, “you can determine how much you can afford by your salary, how much money you’ve put aside for a deposit, the mortgage you apply for, and the local property market.”
Experts tell homebuyers to get quotes from different lenders before finally deciding whom they are going to use. One of the easiest ways to search for a loan is to inquire what the premium and closing costs are. And to get a preapproval from a lender that verifies your salary and credit. It can be a waste of time when you hear that you can get a specific deal only to find out later that the rate will be higher due to a credit check.
A down payment is a portion of the purchase price of your house that you pay at the time of closing. Lenders frequently consider the down payment to be an investment in the house.
“Some experts recommend putting a 20% for a down payment to avoid paying more for private mortgage insurance (PMI),” Venugopal says. “Also, if a broker sees that a buyer is putting down 20%, he or she will accept the mortgage more quickly.”
According to Reiner, using state loans from the FHA or USDA, you can buy a home for as little as 3.5 percent down or no down payment. But, he advises, “Keep in mind that not all or every house accounts for these kinds of mortgages.” “To qualify for low-down-payment mortgages, lenders usually require borrowers to pay PMI, which will boost your monthly expenses.”
Make sure you have enough money in your savings account to cover not only these initial expenses; but also maintenance, renovations, and improvements once you’ve settled into your new home. In addition to the deposit for a house; homebuyers must pay closing costs, including title insurance, solicitor fees, valuations, and taxation. Closing costs typically range from 1% to 5% of the home’s selling price.