Are you ready to buy your first home? If the time has come to take that leap, there are a lot of things that you need to know. From fees to the process, it might all be a mystery to you right now. Luckily, you’ve come to the right place. Leading national lenders EPM share advice to help you make the right decision for your circumstances.
Get Some Expert Advice
First of all, you need to determine whether you’re in the right place financially to afford a home. EPM recommends speaking to a professional, such as a financial planner or personal finance expert. This individual can take a look at your financial setup and tell you whether you are ready to become a homeowner.
Should the financial planner see any issue with your current finances, they can help you. The more you learn about managing your finances and working toward homeownership, the easier you will find this huge life transition.
Evaluate the Risks (and Rewards)
If you have decided that you’re ready to own a home, it’s time to take a look at the risks and rewards. EPM recommends that you take the time to consider what you will gain from buying a home, as well as the potential risks.
One of the major benefits of owning a home is that, if you have a fixed-rate mortgage, your payments won’t increase. What’s more, when you have paid off the interest early on in your loan, your monthly payments go toward the value of your home. As the housing market strengthens, you may also find that your home increases in value. That means that when you sell your home later, you may make extra money.
Before you buy a home, it’s important to think about the worst-case scenario. You will be responsible for the property that you buy. That means that you’re going to have to take care of the repairs and maintenance of the home. Should you run into financial difficulty and miss repayments on your loan, you could risk foreclosure. In some cases, the bank may have to sell your home to pay for the loan fees that you have missed.
Budget for the Extra Fees
Needless to say, getting your finances in order is a major part of buying a home. Before you make any big moves, you need to understand all of the fees that you may encounter. There are one-time expenses that you have to budget for, including:
Ensuring that you have enough money saved for these payments is essential. However, you should also consider the ongoing costs of owning a home. EPM advises that you also take into consideration the recurring fees, which include:
It may help you to create a spreadsheet or budget including all of these costs. Doing so will mean that you don’t miss anything along the way. You can break down all of the costs that you will need to cover and ensure that your current income can cover the total amount.
Want to keep costs down? EPM suggests taking more time to save for your down payment. The larger your down payment is, the less you have to finance. That means that your monthly repayments will typically be lower, which could help you stick to a budget. If you’re worried about this issue, speak to a financial planner for some extra advice.
Choose the Right Loan for You
One of the things that many homeowners fail to realize when they first start out is that there are different types of mortgage loans. Which you choose will depend largely on your financial needs. You can get fixed-rate or adjustable-rate loans, for example. There are also government loans, conventional loans, conforming loans, and jumbo home loans. If you’re confused, EPM has you covered. Here’s what you need to know:
A fixed-rate loan is exactly what it sounds like. The rate of interest you pay on this loan will remain the same for years. If you’re hoping to stick to a tight budget, having this level of consistency could help you along the way. You will always know how much you have to pay. However, getting an adjustable-rate loan gives you increased buying power, which means that you can capitalize if you’re planning on selling your home.
In some cases, you may qualify for a VA or FHA government secured loan, which helps you keep the overall cost of buying a home down. You can use a lower down payment for these types of mortgages. However, only specific people can apply for these loans. Should you wish to get a VA government loan, you will need to be a veteran. On the other hand, if you want to apply for an FHA loan, you will need to live in a specific county.
Most U.S. home buyers get conventional loans instead. Should you fail to meet either of the guidelines, you can get a conventional loan through a variety of lenders. These types of mortgages don’t tend to come with the same restrictions.
Whether you apply for a conforming loan or jumbo loan will depend on the value of the home you intend to purchase. For all single-unit housing that costs less than $417,000, you will need a conforming loan. However, if the cost of the home is above that threshold, you will need to apply for a jumbo loan instead.
If you are paying less than 20 percent as your down payment, chances are you will be required to get mortgage insurance. The insurance protects the lender, meaning that they can collect some of their losses should you default on the loan payments.
On the other hand, if your down payment is more than 20 percent, you may not have to buy mortgage insurance for your loan. You can speak to the mortgage experts at EPM and gain the support you need to figure it out.
Apply for Your Loan and Close
When you have decided on a mortgage type and found your dream home, the final step is completing the application. Fortunately enough, at EPM, the experts can make the process simple. The team will walk you through how to submit your application and every other step of the process. The final step is closing and agreeing to the terms of the contract. Then, you can pop the bubbly and celebrate the purchase of your first home.
Operating in over 49 states, EPM is a national lender providing a range of mortgage products to suit the individual needs of its clients. With certified underwriters on staff and a management team with more than 50 years of experience, the lender is dedicated to getting decisions on applications in a timely manner. The dedicated sales and operations team ensures that closing is swift and efficient.