FirstBank FTHBPacket FinalNoBleeds - Flipbook - Page 3
READY TO BUY?
A home purchase is one of the largest investments that most people will ever make—providing
a stepping stone to personal wealth. But this decision comes with a new set of responsibilities,
so it isn’t one to take lightly. Are you ready for the plunge? Here’s how to know when it’s time to
transition from renter to homeowner.
AROUND FOR A WHILE
There’s no rule barring you from moving after
a home purchase. But if you buy a home and sell
it shortly thereafter, any equity gained during your
short stint as the owner could be lost to realtor
commissions (paid out of your proceeds). Ideally,
you should live in a house long enough to make
a profit. If you can’t commit to an area, continue
renting until you’re ready to put down roots.
An underwriter isn’t going to approve a mortgage
unless you provide proof of stable, consistent
income. But even if you can demonstrate financial
stability on paper, you should only buy a house
if you believe that your income will remain
consistent for the foreseeable future.
YOU’VE SAVED UP
Typically, you’ll need a minimum down payment of
3.5% for an FHA home loan, and a minimum of 3%
to 5% for a conventional home loan. You may also
responsible for closing costs, which average about 2%
to 5% of the sale price. Keep in mind that you should
also have some cash left in reserves after purchasing
a home. Don’t deplete your savings account on
a home purchase; always maintain a cushion.
YOU’RE PREPARED FOR THE
RESPONSIBILITY OF OWNING
Renters have the luxury of calling up a
landlord whenever there are property issues
like broken appliances, pests, etc. Once you
become a homeowner, you’re responsible for
all maintenance and repair costs, hence the
importance of maintaining an emergency fund.
IS IN GOOD SHAPE
You don’t need perfect credit to buy a house. All the
same, a higher score helps you qualify for a lower
mortgage rate, saving you money in the long run.
Depending on your mortgage program, you’ll
need a minimum credit score of 620 for approval.
To qualify for the most favorable rate, however,
wait until you have a score of 700 or higher.
It’s important to understand the types of
mortgages available before buying a home. Home
loans range from conventional to government
products; adjustable to fixed-rates; and 15-year to
30-year terms. A mortgage that’s advantageous for
a friend or relative might not be the suitable choice
for you. Do your due diligence and speak with one
of our mortgage experts at FirstBank Mortgage.