Tips for 1st Time Homebuyers

While I am not going to get into rates and terms. Plenty is already posted about that I just hope everyone had as good as of day as I did talking to potential first time homebuyers. Not sure why, maybe it was the time change but I spoke with three different folks that have decided to take the leap and buy a home. I listed a few items you can share (and I hope get you a sale) with new clients with regards to mortgage questions.

1. Figure out what you can afford. There are plenty of mortgage calculators out there that are easy to use. Simply input a few variables such as mortgage loan amount, the term, the interest rate, etc., and you’ll come up with a monthly payment. You need to be sure everyone is on the same page and use one. Just don't  take the sales price, multiply by 6% and divide by 360. Don't laugh, it happens.

2. Part of figuring out the monthly payment means knowing the PITI. What’s that you ask? Well it is not bread. PITI, or Principal, Interest, Taxes, and Insurance is what will make up that monthly payment of yours. Remember we are dealing with folks that only know a rent payment. We as professionals need to teach.

3. Say you decide to take that step and buy that home. You’ll want to figure out how much you’re going to be paying in closing costs, which include origination fees, taxes, prepaid things like the homeowner’s insurance policy, perhaps HOA (Homeowner’s Association Fees), title and settlement fees, and so on. Now many times you might be able to work with the seller to help pay some of these fees. FHA does allow seller concessions to help with this and up to 3% for a down payment.

4. How much of your monthly expense should a home be? Well, as a general rule, 28% of gross income (this is the number before taxes) is what Fannie Mae recommends you set aside for housing costs. Anything above and beyond that and you risk sacrificing some things you might not want to sacrifice.

5. Think about it. Buying a home is great, but expenses can and do mount up. Once you buy a home, YOU are the person that is responsible for maintaining it. The days of calling landlords to fix things for you is over. On the positive side–the place is yours! You have the freedom and warm feeling of owning your own home–or spray painting the living room at will, if your heart so desires.

Good luck.

Technorati Tags: tony grego,indiana mortgage company,indiana mortgage,indiana home loan,first time homebuyer,credit scores,mortgage calculator,indiana mortgage blog