searching for your first home in a buyer’s market, you can also likely have the seller pay a portion of the closing costs as part of your negotiations.
STEP 3: BUILD UP Y UILD UP YOUR SAVINGS ACCOUNT
Don’t forget to build up your regular savings account — not just for a down payment, but for a little “cushion.” This will not only improve your chances of being approved for a loan — lenders like to see that you have money set aside and aren’t just living from paycheck to paycheck — but will also ensure that you can pay your mortgage in case of job loss or major unexpected expense. A savings account can also help with maintenance and repair costs on your home. According to Bankrate.com, “a good rule of thumb is to assume that you’ll spend 2.5 to 3% of your home’s value each year on upkeep and repairs. If you buy a $250,000 home, aim to save $520 to $625 per month.
STEP 4: RESEARCH HOME SALES ME SALES AND WHAT YOU CAN AFFO U CAN AFFORD
Do some research into recent home sales in the area in which you’re interested in buying a home. Find the average price, the highest prices, and the lowest prices. Look into how long they’ve been on the market. Determine what you want in a home (e.g., number of bedrooms/bathrooms, a garage, a yard, a basement, etc.) and what you can afford. You can figure out how much you can afford using online calculators that consider many different variables. In general, when it comes to conventional loans, expenses related to your home should never exceed 28% of your gross monthly income, says Susan Tiffany, a retired director of Personal Finance Publications for Adults for CUNA (Credit Union National
17
Powered by FlippingBook