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First Time Homebuyer FAQ

First Time Homebuyer FAQ

Buying your very first home is a huge milestone in your life! The unfamiliarity of purchasing your first home comes with a lot of questions, which is why we are here to help you through the process.  Below is a list of the most common questions real estate agents get asked when working with first time home buyers.  A trusted agent is crucial to having a smooth home buying experience, take a look and ask an agent at Berkshire Hathaway HomeServices Northwood Realty Services to get the process started!  

 

Why should I buy instead of rent? 

A home is an investment. When you rent, you write your monthly check and that money is gone forever. But when you own your home, you can deduct the cost of your mortgage loan interest from your federal income taxes, and usually from your state taxes. This will save you a lot each year because the interest you pay will make up most of your monthly payment for most of the years of your mortgage. You can also deduct the property taxes you pay as a homeowner.

 

How much of my income should go towards a mortgage?

When you own a home, the ideal percentage of your gross monthly income that should go toward your mortgage is 28 percent. That means if you make $1,000 per month, no more than $280 should go toward your monthly mortgage payment and related expenses, such as taxes and homeowners insurance. 

 

How much money should I save before purchasing a house?

Saving for a down payment is a big part of purchasing your first home. Although it is common to put 20% down on a house, if you are a first-time homebuyer, you may qualify to put down as little as 3%. But putting down less than 20% may mean higher costs and paying for mortgage insurance, and even a small down payment can still be hefty. For example, a 5% down payment on a $200,000 home is $10,000.  The good news is once you hit your 20% down payment, you no longer have to pay the PMI. 

 

You will also want to make sure that you account for any closing costs and moving expenses when you are budgeting for your next move! 

 

What other costs will I need to account for when buying a home? 

In addition to your mortgage, you will have your monthly utilities. If your utilities have been covered in your rent, this may be new for you. Your real estate agent will be able to help you get information from the seller on how much utilities normally cost. In addition, you might have homeowner association dues. You'll definitely have property taxes, and you also may have city or county taxes. Taxes normally are rolled into your mortgage payment.  Your real estate agent can help you determine what these costs will be and help you determine your home’s price range accordingly.  

 

While buying your first home can seem like a stressful and complicated process, we are here to make sure that every step runs smoothly.  Whether you are just starting to see what is out there or are ready to make the leap into becoming a homeowner, we are here to support you every step of the way! Don’t hesitate to reach out to one of our real estate agents today for more information.