The road to owning a home can be a bumpy one. This is especially if you are an inexperienced Houston first time home buyer. There are many home buyers who have bought homes only to realize later on that they had made the wrong choice. What is worse is that they did not make proper budget considerations when buying their home. Here are some budget considerations to include when buying a home.
As a first time home buyer in Houston, you should be aware of the amount of home you can afford. You can figure this out by using the 25% rule. The rule states that you should not pick a mortgage that is above 25% of your monthly income. As you follow this rule, make sure you add your debts to the mortgage payments. This will help you to know how much you can afford. Most mortgage lenders will not give you a loan if your debt income ration surpasses 43%.
- Figure the Costs Aside From the Mortgage
When you get your loan preapproved, you must not sit comfortable and think that everything is done and dusted. There are usually additional costs that come with home ownership. First there is a home insurance, home repairs including, maintenance costs. For the latter cost you may have a lawn that should be cut, leaves need to cleared, and snow shoved. All this have to be factored into the budget before purchasing a home. Therefore a home that looks affordable on paper may not be affordable in reality.
Being a first time home buyer in Houston, you may be thinking of ways to avoid paying your mortgage insurance. One of the best ways is to make a down payment of 20% of the homes purchase price. Anything below the set amount will mean you will have to pay a higher mortgage rate. As for the private mortgage insurance, the amount you will be required to pay will depend on the size of your home, property valuation and your credit score. The closing cost as a new home buyer can range from 2–5% of the house cost; this is dependent on the state you live in.
As a first time home buyer in Houston, it’s tempting to want to bite more than you can chew. It would be better to pick a home that you can afford. Check the property status and size of the house putting into mind that you may have to make renovations once you buy your home. Remember, buying a large property is not always the best. It may look good at first, but with a huge house comes huge maintenance costs.
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