You need 20% for a down payment, any less and you’ll need to purchase mortgage insurance, paid for on a monthly basis until that 20% is met. It’s best to have the 20%. There are other legal fees at time of closing, so you’ll need extra money for closing costs.
You want to be sure of the area you’re choosing, and why. Location, location, location. If you have children, you’ll want to check the school system., and kid friendly neighborhood. If no kids, or none in your future, you’ll be thinking more of your commute to work.
Don’t buy more house than you need, or can afford. Check out mortgage rates and get in touch with a reputable mortgage lender – they’ll ask income, outstanding debt, they’ll check your credit history etc., and get back to you with an answer if they’ll take you on, along with pertinent information for a loan – how much, according to your income to debt ratio, you can borrow for the mortgage and at what interest rate you fall under with the info given. A good Credit Score = lower interest rate. Ask for a pre-approval letter. This gives the seller proof that you’re a serious buyer and what you are approved for. This letter can also mean you get your dream home over another buyer without one, yet looking at the same home.
However, the lender you chose, will give you the highest figure that you could possibly squeak in your budget. A suggestion would be to look for a home below that figure. Do your own due diligence. Crunch your own numbers. No one knows your budget like you do. Just because the lender says one figure, you will more than likely be more comfortable with a lower one, This gives you some wiggle room, for ‘unexpected’ expenses – which will, as anyone who owns a home will tell you, will most definitely occur. There are plenty of homes on the market. You don’t want to be ‘House Poor’. You want to sleep well at night.
