This is a serious question to ask yourself. List the top 3 reasons why you want to buy and put them in order of priority. Is it because you don’t want to waste money renting? Are you buying because you want to raise a family or be closer to family? Do you want to buy because you think it’s a good investment? Whatever your reason may be, understanding your motivation will determine where and what type of home you buy.
If you are going to occupy the property for less than 5 years ask yourself if you’ll want to sell or rent it out. Knowing how long you want to live in the home can help you choose the best loan option and neighborhood.
The best and easiest way to know what you can afford is to talk to a lender. The lender will help you understand the best loan option for you based on several different factors like your debt to income ratio (DTI), your credit score, employment history and assets. The loan options will include an estimation of your monthly payments as well as a break down of all the closing costs and fees. Lender fees, appraisal, attorney fees and title services add up to about 1-2% of the sales price.
Putting down 20% is ideal, but not necessary. If the property is used as a primary residence, then you can put 3.5- 5% down. If you put down less than 20% cash, the bank will add on a monthly fee called Private Mortgage Insurance (PMI). Once the buyer has 22% equity in the home the PMI goes away forever.
Start researching these neighborhoods that you may want to live in by viewing properties online, going to open houses and driving around the neighborhoods at different times of the day. Talk to neighbors and friends who live in the area. In short, get familiar.
I will provide market statistics and analysis for each neighborhood. You’ll have an in depth knowledge of how quickly homes sell, the months of inventory, the median price and how that compares to years prior. My analysis will give you the tools to know how much to offer and how quickly you need to act.
