First Time Home Buyers: Is Owning Right for You?
A cornerstone of the American Dream is home ownership. Not only is purchasing a home a major milestone for many of us, it’s likely the largest investment you will ever make. Before you make the leap, however, make sure you have a solid understanding of what homeownership entails.
It’s easy to have your head in the clouds when you start to consider purchasing a home of your very own. But don’t let this daydream turn into a nightmare because you didn’t do your research. Costs and time requirements including things like maintenance, mortgage insurance, homeowner’s fees and property insurance are just a few examples of potential costs and risks you need to consider to understand what you’re getting into. If you treat the decision like the long-term investment it really is, you can have the home of your dreams and life you imagined without any big surprises.
At Faira, we understand that every home buyer has a unique set of needs and motivators to own their own home. We’ve assembled a step-by-step guide to help you navigate buying your first home and making sure you are ready for the journey of home ownership.
When setting expectations for your home, knowing what you can comfortably spend each month without overextending yourself is a great way to understand what homes are in your budget. As a first-time homebuyer, the excitement of buying a home and buying the most expensive home you can afford, may result in a poor investment and a lot of unintended stress down the road.
The best way to set your expectations is to understand your budget. A standard rule for lenders is your monthly housing payment (principal, interest, taxes and insurance) should not take up more than 28 percent of your income before taxes. That means, if you earn $100,000 per year, your total mortgage payment should not be more than $2,333.33 (($100,000 x 28%)/12months). If you have other debts including a car payment, student loans, credit card payments, you will want to include these costs into your budget. When considering other debt along with your home mortgage payment, the standard rule is that these monthly costs should not be more that 36 percent of your gross monthly income.
Exercise: Use the table below to calculate your total monthly expenses and divide by your gross monthly income. This will give you an idea of what you can afford and what mortgage lenders will look at when applying for a loan. You can open a spreadsheet here.
Now that you have a good idea of what you can afford, use Faira Offer Assist and get 3% back after you close on a new home. It's simple, all you do is find a home you love, Faira will submit an offer for you, if your offer is accepted and you close, the 3% commission fee is sent directly to you. To learn more about how you can earn thousands back on your home purchase, go to faira.com/offer-assist now.
Interested in buying a home but don't know where to start? Download the First Time Home Buyers Step-by-Step Guide today!