Expectation:
"It is so expensive to buy a house! I have been saving for years and I still don’t have enough for the 20% down payment that I need."
Reality:
This 20% rumor has plagued first-time home buyers for a long time. But it is not true! If you are ready to buy, you can do so with much, much less. The amount all varies depending on your loan type: Conventional loans require 5%, FHA loans 3.5%, and VA or USDA loans don’t require any down payment. To find out what you qualify for, speak with a lending professional to learn more.
Expectation:
"I met with a lender and they pre-qualified me for $300,000! That is even more than I thought I could afford. Now I can start looking at even better houses."
Reality:
Before you fall in love in a home, you need to make sure you know exactly how much home you can afford. To do so, you need to get a pre-approval letter. The difference between pre-qualified and pre-approval has to do with the way the lender looks at your credit. But once you are pre-approved, you should also take a hard look at the hidden cost of homeownership. Things like property tax, mortgage insurance, and homeowner’s insurance should be budgeted into your monthly costs as well.
Expectation:
"This place doesn’t match my style. I was looking for more of a light and airy living space. You know, something a little more modern. This room just feels so dark with all those heavy curtains and overstuffed furniture. It just doesn’t seem like it’s a good fit."
Reality:
We have seen it a hundred time on home shopping shows; the diamond in the rough that just needs a little TLC to be the perfect house. Once it comes to your home search, don’t fall into the bad décor trap. Paint can be changed, furniture doesn’t stay with the house, and curtains can be pulled down. So can walls, if you are so inclined. Your first house will most likely not be your forever home, but you can find an amazing place if you have a little creativity.
Expectation:
"Ok, we have enough for a 10% down payment in savings. Once we get to closing, I think we can borrow some money from my parents to help with the closing costs. Finger’s crossed that nothing breaks in the house after that…"
Reality:
It can cost a lot to buy a new home, especially is you are putting down a large down payment. But don’t deplete all of your capital up front. Make sure to set aside some money that is not going to closing costs or your down payment. And if you are receiving a gift, ensure you and the gift-giver are prepared for the thorough investigation of both your and their financial funds that will inevitably happen. Not all monetary gifts are allowed in real estate transactions so make sure to check with your lender before adding any money to your account before closing.
For more advice on buying a home, visit our Metro Brokers blog. If you are ready to purchase for the first time, you can all our agents to help you step by step at 404.843.2500.
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