5 Crucial Questions to Ask Yourself When Buying a Home
The American Bankers Association has released a treasure trove of tips and guides for anyone looking to buy a home. If you are considering becoming a first-time homeowner, or you would like to purchase a second home or investment property, be sure to ask yourself these five crucial questions from the ABA.
1. How Much Money Do You Have Saved Up?
Before making any big decisions, prospective homebuyers should first take stock of their financial situation. It is important to know how much money you have on hand for a down payment on your new home. Typically, down payments are around 5 – 20 percent of the price of the property. In addition to having money for a down payment, it is advisable to have an emergency fund with three to six months of living expenses.
2. How Much Debt Do You Have?
Another factor to consider as you analyze your finances is how much debt you have. To calculate this, add up all of your ongoing financial obligations, which may include student loans, credit card debt, and car payments. After you run the numbers, make sure that you can afford to make your required payments while also paying for your new home. Ideally, your mortgage payments and utilities will be less than 25 – 30 percent of your gross monthly income.
3. What is Your Credit Score?
The strength of your credit score can determine whether or not you qualify for a loan and how low your mortgage rate will be. A credit score of 750 or higher is excellent, while a score below 600 is considered poor. If you have bad credit, you may want to delay buying a new home and take steps to improve your credit score.
4. Have You Factored in All the Costs?
Drafting a sample budget is a great way to determine if you can afford a new home. Expenses to consider as you create your budget include:
- Yard maintenance
- Home maintenance
- Real estate taxes
- Mortgage insurance
- Homeowner association fee (if applicable)
- Trash pickup (if applicable)
- Parking (if applicable)
5. How Long Will You Stay?
It is wise to have a general idea of how long you intend to live in a potential new home. The longer you plan on staying, the more sense it makes to buy, as you can build equity in your house over time. Be sure to consider your current life and work situation as you decide how many years you would like to spend at your new home.
Meet Our Mortgage Lender
If you have answered all of the above questions and are ready to move forward with buying a home, don’t hesitate to reach out to Tennessee State Bank’s Mortgage Loans Manager, Kristin Lewis NMLS# 410553. For over 28 years, Kristin has helped Tennessee State Bank customers achieve their dream of homeownership.
We offer conventional mortgages for primary or secondary residences and investment properties. Tennessee State Bank also provides FHA loans, which have lower down payments and more flexibility in regard to a customer’s credit score and debt-to-income ratio. Eligible customers can also apply for our USDA Rural Development loans or our VA loans, both of which come with 100% financing.
For more information about securing a loan from Tennessee State Bank, give Kristin Lewis a call at 865-908-1107.
Tennessee State Bank is Member FDIC and an Equal Housing Lender.
“5 Important Questions When Choosing Your First Home.” American Bankers Association, www.aba.com/Consumers/Pages/RentOrBuy.aspx