By: Real America News Updated 30 Mar 2022, 14: 03 pm EDT
Buying a house is not an easy process and generally requires buyers to overcome a learning curve, so that they understand the offers that fit their budget and mortgage processes.
The first thing you should know is that this moment is particularly negative for first-time buyers, as mortgage rates are at record levels and prices too, due to a lack of housing supply.
However, specialists do not believe that this will be the case forever , so they recommend preparing until the market returns to normal.
Understand your budget to buy
One of things to know is that when you go for a home loan, the lender usually will offer more money that you can afford without putting too much stress on your budget.
“You should consider that what a lender will allow you to borrow it is not necessarily the same amount that you can reasonably pay”, explains the financial planner, Eric Roberge, in a report for CNBC.
When he talks about a lender he refers to a bank. Financial institutions that lend money to buy a new home will generally calculate a loan based on around 30% of your monthly payment capacity.
However, Roberge advises its clients that do not take the 30%, but the based on monthly payment stays within 20% of gross income monthly.
Get used to paying, even if you don’t have your mortgage yet
A good decision that future buyers can make, even before betting on a property, is to pretend that they already is paying the mortgage, to check the pressures to which your budget is going to be subjected.
“I tell you that, while are looking for a house, they should try to live as if they are already making that higher payment,” said Brian Mercado, a CFP Financial in Los Angels to CNBC.
The expert says that The additional savings that result from doing this exercise can be added to the initial payment , and alleviate the financial impact of giving the step of buying a home.
Think about the future, not just to satisfy the present
For Campos Financial specialist in Miami, Stephanie Campos, first time buyers should consider the future and not just an immediate solution to their needs.
Campos suggests that buyers ask themselves if the house they are looking to buy will be sufficient for your needs in the next 5 o 10 years.
Know your mortgage options
If you are a first time buyer with a score less than 600 it is recommended to look for mortgages backed by the Federal Housing Administration (FHA).
FHA mortgages are designed for first time buyers who cannot afford the 14 % of initial entry, since they only require a 3.5% start-up.
However, these mortgages have slightly higher rates and some additional payment requirements.
Finally, the specialist recommends buyers request multiple prequalification letters from lenders, for different amounts and for different strategies.
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