So you’ve had it with renting. Well, mortgage rates aren’t too steep these days, which means it might be time to consider a down payment. If you do enough research, you can find a 4.175 percent rate—if not less.
Once you’ve identified a location, you should follow these five steps:
#1: Scope the Market
Look around. Figure out how much nearby homes are selling for, then calculate a rough estimate of your average monthly payment. Analyzing the market will help you set a budget.
#2: Break Down Monthly Costs
When you buy a home, you’re not just paying a mortgage. Also consider taxes and monthly insurance fees. Do your research on local taxes and get an insurance quote online right away.
#3: Calculate Closing Costs
You’re not just covering your down payment when you close a home. Don’t forget lender’s origination fees, title and settlement fees, and other upfront costs. Closing costs can range from $5,000 to $10,000—or more.
#4: Determine Your Down Payment
Speaking of down payments, figure out how much you can afford to put down. If you can afford 20 percent, do it to avoid extra monthly payments. If you’re closer to five percent, then it might not be time to buy yet.
#5: Look at the Big Picture
What will your budget look like post-closing? Will you struggle to make ends meet? Why are you buying a home in the first place? Ask yourself these questions before spending any money.