Buying a home still seems to be on the list of “requirements” many Americans have set for themselves in order to consider themselves successful. But for many young adults, it can be difficult to wait and save up for the many expenses that come with first time home ownership. There are a lot of things to consider prior to buying your first home, including finances.
How Much Can You Afford
Before looking at houses, or falling in love with a house you can’t afford, visit with your banker or other financial professional to find out how much you can comfortably afford. It is a good idea to stay away from the top end of the budget you are given by the bank if you are pre-approved. Of course, you know your finances best, so make sure your new house payment will fit into your monthly budget comfortably.
How Much to Save
Ideally, first time home buyers should have saved up 20% of the value of the home they wish to buy for a down payment. In addition, they should also be prepared to pay for loan closing costs, home inspection costs, and they should have some extra money stashed away for the unexpected costs that always seem to pop up along the road to home ownership.
Again this is the ideal situation. For many young adults it would take a significant amount of time to save up this amount of cash, especially if they have student loans or other debt to repay at the same time. Luckily, some home loan companies have begun offering low (or no) deposit home loans to help people get into their own homes sooner rather than later. HomeStart low deposit home loans are just one option available to prospective home buyers.
In addition to low deposit home loans, there may also be governmental programs or grants that first time home buyers can qualify for to help them to more easily afford their dream home.
Are you a home owner? What other financial things did you consider prior to buying your first home?
Photo from Zillow.