Buying a home is symbolic of achieving a dream. Home ownership gives your family stability. It also provides an opportunity to build equity.  The Department of Housing and Urban Development points out that owning a home is an investment since you can build equity that you would not be able to if you were renting.  Buying a home is a commitment and a responsibility and will likely be the largest purchase you ever make.

Facts About Home Ownership

• A home allows you to build equity and wealth.
• A down payment of twenty percent can save you from paying Private Mortgage Insurance (PMI).
• PMI protects the lender if you default on the loan but will not protect you if you do not make payments or if your home is destroyed in a disaster.
• Plan for your house payment to be about twenty-five percent of your income.

Preparing for Home Ownership

Before you buy a home you should be in a good position financially. Having a good credit score will help you qualify for the best interest rates, but you may be able to qualify for a loan with federal assistance even if your credit score is not perfect. Saving up a down payment will help show lenders you are ready to buy a home and it will allow you to purchase a more expensive home.

Steps to Buying a Home

• Get pre-qualified before you buy your home, so you know how much you have to shop with.
• Determine how much you can afford to pay each month for your home. You should keep in mind that you will need to pay insurance and taxes on your home as well as any home repairs or improvements you want to make.
• Contact a realtor and begin viewing homes within your price range in the area you want to live in.
• Choose the home that is the best fit for you and your family.
• Make an offer on the home. Your realtor will take you through the negotiation process to get you the best price for your home.
• Get an inspection done of the house. The inspector will look for problems in the wiring, plumbing and building of the home. Request any repairs that need to be made before you finalize the purchase.
• Finish your application for the loan and wait for it to be approved.
• Sign the papers and move into your new home.

Choosing a Mortgage

Finding the right mortgage is an important part of purchasing your home. You should pay attention to the rates, fees and points associated with your loan. The interest rate may be set, which means it will not change once you have taken out the loan or it may be adjustable, meaning they can raise the rate after a certain period of time. If you can qualify for a set interest rate it may save you money, and it is a good option if interest rates are particularly low at the time. There are many fees associated with a loan including the application fee, origination fee, and closing costs. Additionally, you may have the option to purchase points towards your mortgage. These can reduce your interest rate. The Federal Trade Commission recommends that you shop around for several different loans to qualify for the best loan possible. Do not be afraid to ask for better terms or reduced costs.

Warnings

It is important to buy a home you can afford. Many foreclosures happen because people bought houses they could not afford. Ginnie Mae, a government resource for first time homebuyers, provides a calculator to help you estimate how much you can really afford. If you have a large house payment it can cut into your lifestyle and make it difficult to enjoy vacations or other activities with your family.

It is important to have an emergency fund when you purchase this home. The emergency fund can be used to make repairs on your home when things go wrongs, as well as to help cover house payments if you were to lose your job. Many people do not calculate the cost of home repairs into their budget when planning to buy a home, and an emergency fund can make up for any miscalculations.

Conclusion

Buying a home is an exciting step. You need to purchase a home you can afford, so that your mortgage payments do not cripple your monthly budget or make it difficult to pay for the other things you enjoy in life. Finding a good realtor can make the home buying process much easier by finding you the perfect home and explaining each step as you make it.