Thinking about taking the plunge into homeownership? You might be experiencing all the emotions that come along with making such a big and important life decision. You’re probably excited, a little nervous, maybe even a little scared. And you probably have questions. Here are some of the most common questions first-time buyers have.
Great question. Before you look at houses or start to think about securing financing, it’s good to begin by taking stock of your individual situation — emotionally, mentally, and financially. Make a list of the pros and cons of renting versus buying. Experts tend to believe that buying makes the most sense when you’re planning to stay in the same place for several years.
Real estate experts recommend doing a thorough review of your finances before making a definitive decision to buy. Make a budget and include estimated costs of utilities, commuting, and upgrades you’d want to make to a home after buying it. Consider things like the amount of your down payment and your credit score, since both of those things will ultimately affect the terms of your mortgage. Finally, use Mr. Cooper’s calculators to estimate how much you could borrow.
Another great question, which brings us back to the down payment. According to the experts at Mr. Cooper, the typical range for down payments on conventional loans is 5 percent to 20 percent of the total value of the home. Know your options —putting down less can mean additional expenses in the form of things like private mortgage insurance. Saving for a substantial down payment can be tough for many Americans, and you probably don’t want to have an empty bank account upon closing. You never know what might need immediate fixing in your new home.
You know that you’ll need to borrow in order to achieve your goal of purchasing a home. Selecting a mortgage is just as important as choosing a house, and the CFPB recommends that once you have a good sense of your budget and priorities you can start researching loan types — fixed-rate, adjustable rate, 15-year, 30-year, etc. — and meeting with lenders. Once you’ve found your dream home, you can get official loan offers and compare your options.
Want to know more about what it takes to buy a new house? Click here to read our home buying guide and learn more about everything from down payments to closing — and call Mr. Cooper today to explore your options.