Every American wants to own a house in their lifetime, right? For most who live in expensive real estate markets that dream may seem impossible.
Here are some helpful suggestions to make that dream a reality!
#1 Make sure it makes sense to buy
Buying a home is one of the largest financial decisions you will make in your life so the first step is to make sure it makes sense to buy instead of continuing to rent.
If you know where you would like to live (and school district, if you have children), the next step is to evaluate if it is cheaper to rent or buy?
Calculate your home budget from your rent.
Use your monthly rent as a starting point for how much you can realistically afford to pay every month in total housing costs.
**Make sure you include assumptions about down payment, mortgage term, mortgage interest rate, private mortgage insurance (mandatory with a low down payment mortgage), homeowner’s insurance and property taxes.
#2 Don’t fixate on one neighborhood.
We suggest that you house hunt in a minimum of three different neighborhoods before you decide on your top target location. You may find that looking outside of your current area opens the possibility of lower home prices, better schools or a more spacious home.
#3 Explore first time homebuyer programs.
Lenders typically require that home buyers pay at least 20 percent of the home’s purchase price and will offer a mortgage of up to 80 percent of the appraised value of the home. In an insanely expensive real estate market like Southern CA , where median home prices are very high, a 20% down payment could amount to several years’ salary. You could be eligible for a low down payment mortgage backed by the FHA, VA, USDA, or Freddie Mac, that offer as low as 3% of the purchase price.
#4 Downsize your lifestyle while saving for a down payment.
Consider downsizing your lifestyle 1-3 years prior to purchasing a home to save as much as possible for your home down payment, closing costs, and moving expenses.
#5 Maximize your credit score.
The higher your credit score up to a certain point (about 760), the better the mortgage interest rate you will receive and more likely to be eligible for a lower down payment program.
Contact www.SoCalLifeRealtors.com for all your real estate needs.