Choosing a New Home

What do you need to consider prior to choosing a new home and a new mortgage? 

Moving into a new place can be exciting and frightening at the same time. In order to avoid making a decision you’ll regret, we suggest five questions you might consider when choosing your new home.

1. How much money do you have saved up?

Start with an evaluation of your financial health. Figure out how much money you have for a down payment. Down payments are typically five to 20 percent of the price of the home. Be sure that you also keep enough in savings for an emergency fund. It's a good idea to have three to six months of living expenses to cover unexpected costs.

2. How much debt do you have?

Consider all of your current and expected financial obligations like your car payment and insurance, credit card debt and student loans. Make sure you will be able to make all the payments in addition to the cost of your new home. Aim to keep total mortgage payments plus utilities to less than 25 to 30 percent of your gross monthly income. Recent regulatory changes limit debt to income (DTI) ratio on most loans to 43 percent.

3. What is your credit score?

A high credit score indicates strong creditworthiness. Both renters and homebuyers can expect to have their credit history examined. A low credit score can keep you from qualifying for a low interest rate on your mortgage loan. If your credit score is low, you may want to delay moving to a new home and take steps to raise your credit score.

4. Have you factored in all the costs?

Create a hypothetical budget for your new home. Find the average cost of utilities in your area, factor in gas, electricity, water and cable. Consider the cost of yard maintenance and other basic maintenance costs like replacing the air filter every three months. Also factor in real estate taxes, mortgage insurance and possibly a home owner association fee.

5. How long will you stay?

Generally, the longer you plan to live somewhere, the more it makes sense to buy. Over time, you can build equity in your home. On the other hand, renters have greater flexibility to move and fewer maintenance costs. Carefully consider your current life and work situation and think about how long you want to stay in your new home.

We can help!

Our Loan Officers are always available to give advice and to help you determine if moving is right for you. Call 753-1521 to speak to a Loan Officer today, or click here to apply for your mortgage today!