buying a home with little money in savings

Home Purchase Preparation Recommendations To Help You Through The Process

by Fernando Moore

The dream to own a single-family home with its own private yard is one that many families are realizing this year. Mortgage rates being low and extra income from tax benefits provide a great scenario to help you buy the home you want. Here are some recommendations to help you prepare for your upcoming home purchase.

Calculate Your Home Budget

Before you even start looking at homes to purchase, it is important that you understand how much you can afford. Otherwise, you will be wasting your time looking at homes that are over your budget. 

To determine how much you can afford with a home, you will need to evaluate your fixed living expenses and how much you bring home as pay from your job. Look online for a mortgage calculator or consult with your mortgage lender about how much loan you can afford based on your estimated monthly payment. This figure may vary based on the interest rate that you can lock in for your mortgage, but you can estimate the rate for a basic calculation. Then, do not forget to figure in your homeowners' insurance, property tax bills, and new utilities that will come with your new home. 

Determine Your Down Payment Potential

The amount of your home down payment is going to affect a lot of factors through the buying process and into homeownership. First of all, the amount that you have as a down payment will help strengthen your position of buying a home when you put it down as earnest money. This can be of great help if you are buying a home in a competitive market where there are a lot of buyers and you want your offer to stand out above the rest. 

Your down payment is also going to affect the terms of your loan and how much you pay for the loan over its payback time period. If you have a larger down payment, you will have to finance less of the home purchase or it can potentially increase how much house you can buy.

When at all possible, start saving early for your home's down payment. Otherwise, gather together as much of your savings, tax refund, or other extra income to help put toward your home purchase to help you save on this important purchase.

For more information on buying a single-family home, contact a real estate broker near you.