Are you thinking of buying a house some time in the future? While it can be a financial prudent decision for some people, it’s not something you should just jump into. Buying a house is probably going to be the most expensive purchase you’ll make in your life, so you want to make sure the numbers work for you.
Speaking of numbers, have you decided how much money you’re going to save for your new place? If not, no worries – I’ll share some sites and ideas for you to consider. Hopefully you’ll find something that works well for you.
What Kind of Place Do You Want to Buy?
If you’re pretty certain about the area you want to purchase a home in, I would recommend sites like Zillow and Trulia where you can get a fairly good estimate of how much money you’d need. You may be surprised at how low or high the prices is currently. You should also check to see if there are any home association fees with the property. That can be a great deal or a nightmare as each one is different. Either way, it’s something that you should factor in with your finances.
How Much Down on the House?
The old standard for buying a house meant putting 20% down. With the housing bubble, some lenders were selling homes for 0% down. One consequence of that was borrowers have a higher mortgage than what their finances could handle.
Even though there are some lenders that will allow buyers to put a small amount down, it’s in your best interest in many cases to save up for a bigger down payment. If you’re paying less than 20% down, then you have an added financial burden of private mortgage insurance.
Some try to get around that by getting a piggy back loan, where their mortgage is for 80% and the rest is covered under a separate loan. The second loan usually has a higher interest rate so that could be a big strain on your finances.
Another benefit of putting down a bigger down payment is how it can help you get a better (aka lower) interest rate on your home mortgage. That can save you quite a bit of money.
Thoughts on Buying on a House
I know some readers are already on the hunt for their house; I’d love to get your thoughts on the process. What kind of a house are you buying? How much do you want to put down for it? How are you saving up for it?