ORLANDO, Fla. – Sixty-four percent of Americans who live in houses own their home. If you’re making the transition from renter to homeowner, it’s time to take your finances seriously.
If you’ve decided to buy a home, what questions should you ask first?
“How much can they afford? They should start asking their bank or lender what are their financing options? What do they qualify for? How much money can they spend on a home?” said Edward Storey, a real estate attorney.
Experts advise against wasting time looking outside of your budget.
“People like looking at houses that are outside the scope of their budget, which I can appreciate, but ultimately, it slows down the process if it’s not realistic," Storey said.
You can get pre-approved for a mortgage by submitting finance and credit information to your lender. Pre-approval is good for 90 days, so do this when you’re ready to decide on a house.
Not sure which home loan to choose? A fixed-rate mortgage is good if you plan on being in the home for a long time. An adjustable-rate mortgage may be better if you plan on selling the house in a few years.
And don’t forget about unexpected costs like “the termite inspection, the home inspection, appraisal, survey, some of the things that the bank may require,” Storey added.
Want a quick estimate on how much of a loan you should take out? Nerdwallet.com has a mortgage calculator to help you calculate how much you should borrow depending on your annual income, expected loan term interest rate, and your monthly debt payments and home-related expenses.