your finances. Crunch all the numbers. A frequent mistake of first-time home buyers is comparing a month’s rent to a month’s mortgage payment. Many people don’t have all the numbers. There are many additional fees necessary to include to make a fair comparison: principal interest, property taxes, property insurance, homeowners’ association (HOA) fees, and ongoing maintenance. Are you prepared for the down payment? This is the lump sum payment that funds your equity in the property (how much of the property you own). Sometimes relatives help with the down payment. If you have a choice, take a gift from a parent or other relative rather than a loan because lenders will add the loan debt to your other monthly obligations, which will affect your total debt to income ratio. Be very clear with your lender about acceptable donors for the gift and the documentation. That is another "Non-Realtor" area where I can be helpful. Can you afford the monthly mortgage and its components? Generally, a mortgage includes principal and interest (both amortized over the life of the loan), homeowner’s insurance and property taxes (prorated). These items can affect the monthly payment by several hundred dollars.
ADVANTAGES OF BUYING YOUR HOME
Control over housing expenses. By selecting a fixed-rate 15, 20, 25, or 30 year mortgage, principal and interest won’t increase over the period. You build equity. Some of each monthly mortgage payment goes toward the loan’s interest. Other portions may go to homeowner’s insurance and county taxes. The remainder pays down the loan principal. Every dollar put toward your loan’s principal represents a dollar of equity — actual property ownership. Further, the property should appreciate each year, adding to
17
Powered by FlippingBook