Tips for First Time Home Buyers

Tips for First Time Home Buyers
By Rick Merlini
American Heartland Homes
Macomb, Michigan
Certified Professional Master Builder
2 Time ABC Extreme Makeover Home Edition Home Builder

 
With interest rates low, many renters are starting to think about purchasing a home of their own. With simple rental cost vs. mortgage cost comparisons, it can be very attractive to buying a home. But there are a few other factors to consider:

How long are you plan to live in the home?
Selling a home costs money. If you potentially may have to move in the short term, the value of your home may not have appreciated enough to cover the costs of buying and selling.

The length of time that it will take to cover those costs depends on various economic factors. Average appreciation tends to sit at around 5% per year. In this case, you should plan to stay in your home at least 3-4 years to cover buying and selling costs.

How long will the home will meet your needs?
What features do you require in a home to satisfy your lifestyle now? Five years from now? People tend to remain in homes longer than they initially intend, primarily due to the work and expense associated with moving. Therefore it is worth considering a home with room to grow. Could the basement be turned into a den and extra bedrooms? Could the attic be turned into a master suite? Having an idea of what you’ll need will help you find a home that will satisfy you for years to come.

Your financial health – your credit and home affordability?
Is now the right time financially for you to buy a home? Would you rate your financial picture as healthy? Is your credit good? While you can always find a lender to lend you money, people with poor credit tend to pay far more to borrow.

Some say that you should refrain from borrowing as much as you qualify for because it is wiser not to stretch your financial boundaries. The other school of thought says you should stretch to buy as much home as you can afford, because with regular pay raises and increased earning potential, the big payment today will seem like less of a payment tomorrow. It is, however, important to stay within your comfort zone.

A Good rule of thumb is the “28/36” rule. The “28/36″ rule means that your monthly housing costs should not exceed 28 percent of your income and your total debt load should not exceed 36 percent of your total monthly income. This rule is a good starting point.

Where will the money for the transaction will come from?
Homebuyers will need some money for a down payment and closing costs. The mortgage industry has changed and lenders what you to have skin in the game. A rule of thumb again is going to be a minimum of 3% if you qualify for a Government back loan and more like 10 to 20% for a conventional loan.

Have you figure in the costs of home ownership?
Maintenance, improvements, taxes, and insurance are all costs that are added to a monthly house payment.

I hope this article helps you give some food for thought. Remember, greatness in is the details. It is those small details that will make the difference. Most homes in Macomb Michigan will have those small details. So don’t forget them. Good luck with your search of that new home. I hope this article will help you.

If you have any other questions about buying homes, selling homes, building a new home or any new construction question here in or around Macomb Michigan, feel free email me at rick@livewellcustomhomes.com Thanks for visiting my blog.


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