A lot goes into purchasing a house. For a first-time homebuyer, the experience is brand new and the learning curve can be steep. Before you start the process, keep these five things in mind as you secure your house’s financing.
Set a budget
Like any major financial venture, it’s a good idea to set a specific budget. You need to make sure that you can afford a monthly house payment, and you need to determine how much monthly house payment you can afford. And don’t forget to factor in the added utilities and maintenance costs of owning a house.
The more money you can put into a downpayment, the lower your mortgage loan. It’s as simple as that. Start saving up well in advance of beginning your house search so you have some money set aside. Some loans require a downpayment of three to five percent of the loan amount.
Don’t let the price tag scare you away. You have some options when it comes to assistance. The South Dakota Housing Development Authority (SDHDA) offers first-time homebuyer assistance and downpayment assistance for those with a tighter budget and a lower income.
Learn the lending lingo
When you’re on the hunt for a mortgage, it’s a good idea to familiarize yourself with the terminology. The “terms” of your mortgage refer to the length of the loan repayment plan. Your interest rate can be “adjustable” – it can vary throughout the life of the loan – or “fixed” – it remains the same for the life of the loan.
Find a lending institution
Not every financial institution offers the same options to you – it’s a good idea to get preapprovals from multiple institutions to find the best fit. Lenders should provide you an estimate at no cost, so it doesn’t hurt to shop around.
Keep these financing tips in mind when prepping your first home purchase – gain the peace of mind of feeling prepared.