Blog

Are You Financially Ready to Buy Your New Home?

  • Post category:Featured

Are You Financially Ready to Buy Your New Home?

Am I Ready To Buy A Home Question

How do you really know that you are ready?

Checklist

Here's a short list to help you answer that question.

Are You Debt-Free With a Healthy Emergency Fund?

Reduce your debt one by one, working your way up from smallest to largest to build momentum. This snowball method is the quickest way.

Next, start stockpiling money in an emergency fund. Three to six months of expenses should do the trick.

This ensures you can handle unexpected expenses that come your way once you own a home.

Do You Have a Good Down Payment?

The best way to buy a home is to put 100% down. If paying cash for your home isn’t in the cards this year, set a goal of saving at least 10%. Of course, 20% will put you in an even better position because you’ll avoid paying private mortgage insurance (PMI). Keep your payments at no more than 25% of your take-home pay on a 15-year conventional fixed-rate mortgage.

Can You Can Pay Your Own Closing Costs?

Although some home sellers cover closing costs to sweeten the deal, don’t count on it. On average, closing costs can range from 2% to 5% of your home’s purchase price. For a $200,000 home, that’s anywhere between $4,000 and $10,000 to cover items like:

  • Loan origination fee

  • Home and pest inspection fees

  • Appraisal fees

  • Prepaid property taxes and mortgage insurance

  • Title insurance

  • Recording fees

  • Underwriting fees

You can put money aside for your closing costs, but you won’t have a clear idea of what those costs will be until you receive a loan estimate form from your lender after you apply for your mortgage. Just be aware that these can change before it’s time to close on your home.

You should receive your final closing disclosure form at least three days before closing. Review it carefully for unexpected cost differences, and ask your lender to explain any charges you don’t understand.

Did You Remember Moving Expenses?

Whether you pay a moving crew hundreds of dollars to pack up and move your belongings or you provide a pizza dinner to a handful of your best friends after they help you move, you’re going to have plenty of moving expenses:

  • Boxes, bubble wrap and other moving supplies

  • Deposits for utilities

  • Cleaning supplies

  • Appliances that aren’t included in your home purchase

  • Any pre-move-in upgrades like painting, new furniture and closet organization

While you wait for your closing date, get good estimates for what these costs will be—request quotes from moving companies, shop for appliances, etc. Pad your move-in budget a bit so things go as smoothly as possible.

One Last Tip If You're Buying A New Home

Work with a real estate professional that understands the above questions and who is experienced at the negotiating table. Skyrise Real Estate Group understands the in-and-outs of buying a new home and is Silicon Valley's choice for boutique real estate service.

BRE: 01338047