The Home-Buying Decision: 4 Important Things to Consider

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Posted on March 27th, 2013 in Home Buying by NSBblogger |

Chances are you’ve heard about the housing market in the United States recently. It is often a topic on the nightly news and is used as an indicator as to how our economy is fairing. A new home is a chance to build equity, take advantage of tax deductibility of your mortgage interest and of course, getting your own slice of the American Dream.

Before you sign for a new home, you need to be sure your financial and personal life is sound and stable.

Despite what the experts say, you don’t have to find the perfect home or wait for ideal market conditions before making a purchase. Buying a new home is nothing to take lightly, but there are four main things to consider before signing the closing papers:
The size of your savings account- at the bare minimum you need five percent of the cost of your new home saved up. The larger the down payment you have, the better interest rate you will get. A down payment of at least 20 percent of your home’s cost allows you to avoid costly private mortgage insurance.
How much home can you afford? – you can find many different guidelines when it comes to this. One that we recommend is looking at your mortgage payment, which includes one month’s property taxes and one month’s homeowner’s insurance as a percentage of your monthly income. Keep it under 28 percent. And remember, any percentage guidelines like this that you find are limits, not goals. Buying a home a little under your means allows for more money to spend on other aspects of your life.
Check your credit- get all three credit scores, as well as your FICO score before applying for a mortgage loan. If you’ve had a few missed payments lately, take some time to catch up before applying. A better interest rate can mean the difference between thousands of dollars in your pocket.
Job stability and home life- more than just being able to afford the monthly payments, you can be stuck without being able to recoup your investment if you move or get a divorce, even if you do sell the house.
While there are other things to consider, the above items are a great starting place, and go a long way in helping you determine whether you have the means and stability to buy a new home.  When you are ready, come to Northeast Security Bank and we’ll help you with your mortgage loan needs!

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