Purchasing a home is one of the most exciting steps you’ll take as an adult. Finally being able to paint the walls the color you want and put up the chandelier that matches your home décor on your Pinterest board are just a few of the endless perks. However, knowing when to pull the plug on renting is one of the hardest decisions you’ll make. If this is the year you’re hoping to start looking on Zillow, consider the following:
The down payment
In my opinion, this is one of the scariest things to think about. Most potential homeowners will put a 15-20% down payment, depending on the home and type of loan you’re looking at. The higher the down payment, the better mortgage rate and monthly payment you will have. Also, note that the money for the down payment will need to be wired to the title company prior to closing so everything must be squared away before you get the keys to your home.
3-6 Months of savings
It’s easy to let the excitement of owning your own place fog your judgement. Yes, becoming a homeowner seems like a dream, but you can’t forget that life sometimes comes with unexpected turns and you should have enough in your savings to cover those costs. A hospital visit or car repairs can throw your monthly expenses into a frenzy and having those funds for such emergencies will make getting over these hurdles a little easier.
Closing costs
Prior to starting the home buying process, I had no idea we’d eventually face a page full of closing fees. From inspections and appraisals to taxes and insurance, closing costs will usually add several thousands of dollars to what you’re already putting away for the down payment. The best way to get an early look into what these might look like is to find a mortgage broker that will work with you one-on-one and help you get a better understanding of the fees and figures.
