- Even after getting approved for a loan, don't accept one with monthly payments that are higher than you feel comfortable making. If you do, you're begging for problems later trying to keep up your mortgage payment which could mean foreclosure on your home.
- First-time buyers often turn to friends and family for advice, but your friends and your family may have strong opinions that don't necessarily match yours. Some may be extremely knowledgeable; others may not have been in the housing market for years. In addition, what worked for a friend may not work for someone in your income bracket.
- Visit the home at least twice. It makes sense that most people will view a home during the day. But to get a "real" feeling for the house, you should visit the home during the day, at night and on a weekend. This lets you see whether, for example, the park across the street is an asset or an evening hangout.
- Now it’s time to get approved. Typically a credit check will be one of the first things the lender will do. They will identify your debt and the amount of money you hold in the bank, in investments, and/or in certain types of retirement accounts. If you fit their program’s requirement, then you are ready to sign for the mortgae that gets you into your new home.
- If you fail to meet their minimal standards for the loan, find out what minimal amount you would need up front. Then shop around to find other programs that will fit your needs.
- Generally you have to pay for the loan closing costs, which normally amounts to a few thousand dollars worth of upfront fess. The fees will cover items from title insurance to loan fees. Prior to selecting a loan, be sure to ask the lender what fees you will have to pay at escrow signing. (Get it in writing).
- If you put less than 20% down, lenders will most likely require you to pay private mortgage insurance, PMI. This insurance protects the lender in case you default on the loan. And unfortunately, PMI will add to the monthly house payment as well as thousands of dollars to your home purchase over the first few years of the loan.
- You can avoid PMI by getting a small second mortgage at the time of closing to cover as much down payment as possible.
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Home Ownership Has Tax Advantages
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You may be able to exceed the standard yearly deduction, since the U.S. government permits tax incentives for homeowners. Check to see if your state offers that benefit.
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You receive a tax deduction for the yearly interest on your primary and vacation home – equaling a large amount of your total payments for the first several years.
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You can deduct the total amount of your yearly property tax bill.
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