Searching for a home is a unique affair. A singular experience can be described as exciting, scary, fun, and confusing. It is definitely one of those life experiences where you will benefit from collecting anecdotes, advice and warnings from family, friends, and realtors.
A good starting place is with a list of the things you need in a house. Then, back into the things you want. Not interested in a house more than 20 miles from New York City for commuting purposes? That’s something that can’t be changed, so it’s reasonable to say it’s a “need.” (We hear Bergen County is a good choice!) Thinking a hot tub might be nice? That is something that can be purchased and added to the home at any point, so that would fall into the “want” category.
Here’s a handy checklist you can fill out just for fun or to see where you stand. You can even bring it with you to an appointment with a realtor.
It’s easy to get carried away with fantasies of your dream home. Wants and needs aside, at the end of the day it comes down to what you can afford, and it’s important to be realistic about your budget. Here are a few basic tips to get you started on the path to your forever or “for now” home.
Save, Save, Save! We can’t say it enough, but we’ll stop at three times for now. As with many major purchases — and buying a house is one of the biggest — costs add up. First-time home buyers can be caught off-guard by some of the expenses that come along during the process, so the more savings, the better. If you don’t have a savings account, think about opening one up sooner rather than later. Consider one with a higher variable rate of interest, like NVE’s Super Saver Account, to get a better return on your money. NVE’s Universal Club Account is designed to help save for a special occasion (like a down payment) by making fixed, periodic deposits to your account over 12 months. At the end of that time, the total amount of your deposits, plus interest, is credited back to your checking account.
Know your credit score. When it comes to borrowing money for a house, having a low credit score might mean more than settling for a high interest rate; it can result in you not being approved for a mortgage at all. Make sure you know your credit standing before doing anything. Here are some FAQs about credit history to help you better understand what it is and how it works.
Don’t break your budget. Once you determine your maximum monthly mortgage payment, you are one step closer to narrowing down your search pool. Keep in mind that you actually have two budgets during the house-hunting stage. No, you don’t have twice the money — sorry. It means 1) your own budget and 2) the maximum amount you can borrow from a lender. Get pre-approved to find out whether or not a lender can approve a mortgage loan, and if so, how much you’re qualified to borrow. A good rule of thumb is to operate with the lower of the two budgets in mind. A giant loan sounds nice, but don’t forget it has to be paid back, with interest. Don’t dig a hole you can’t get yourself out of!
Bonus tip. Here’s a quick formula to help you figure out your budget. Compare the amount of money you earn each month (after taxes) to how much you spend on debts and expenses. See that number? That’s your housing budget.
Timing is everything. Not all mortgage loans are created equally, and interest rates play a big role in that. Take the temperature of the current market by looking at some current mortgage rates. If you are reading this blog because you are currently looking for a home, or thinking about it, your timing is good because rates are low right now. Take advantage before they climb again!
This is far from a complete guide to buying a home, but it’s a good start. NVE’s Mortgage Loan Relationship Manager makes finding the right mortgage quick, easy and painless. Call today at 201-816-2830, ext.1230, or apply online at nvebank.com.