Buying a home for the first time can be an exhilarating and nerve-wracking experience all at once. On the one hand, buying a home means taking the first steps toward long-term stability. On the other hand, if you are underprepared for buying a home in Gresham, you could easily find yourself in over your head. Gresham locals looking to buy a home for the first time can feel more confident with the home buying process with Stonebridge Mortgage Group. We’re here to walk you through the steps you need to prepare yourself for buying your Gresham home.
Pay Off All Debt and Build an Emergency Fund
Even if the monthly house payments are similar or cheaper than the current cost of renting your home, owning a home is often still more expensive than renting. Gresham locals will find that, as a homeowner, you are responsible for all of the maintenance and upkeep costs. To make sure you can keep up with these costs, make sure you are debt-free and have an emergency fund of three to six months in place to cover the expenses that come with owning a home. Having an emergency fund to fall back on when huge expenses come your way means you won’t have to stress or worry about falling behind on house payments. Once your debts are gone, stay debt-free as long as you can manage. Gresham locals looking to buy a home should especially be wary of taking on additional debt in the middle of buying a house, because it could delay your approval for a mortgage.
Determine How Much House You Can Afford
Decide on a budget before looking for a home. When shopping for a home in Gresham, you don’t want to get too emotionally attached to a home you can’t afford. Make sure you have enough money not only to pay for your monthly mortgage, but also for HOA fees, taxes, insurance, and so on. Your monthly housing costs should be no more than 25% of your monthly take-home pay.
For example, if you bring home $5,000 a month, 25% of your monthly income is $1,250. Based on a 15-year mortgage with a 4% fixed interest rate, here are the home options you can afford (not including taxes and insurance):
- $187,767 home with a 10% down payment ($18,777)
- $211,238 home with a 20% down payment ($42,248)
- $241,415 home with a 30% down payment ($72,424)
- $281,650 home with a 40% down payment ($112,660)
Be sure to account for insurance and other fees in your monthly house payments.
Save for a Down Payment
When looking to buy a home in Gresham, it will benefit you most to save for a down payment of 20% or more. With a down payment of 20%, you won’t have to pay for private mortgage insurance, which protects the mortgage company in case you can’t make your payments and end up in foreclosure. There are first-time home buyer programs that offer lower down payment options, but they do end up costing you more in the long run.
The same thing applies to mortgage terms. With a 15-year mortgage term, your monthly costs will be higher but you’ll pay it off more quickly and save thousands of dollars. Carefully consider your options before making a final decision.
Save for Closing Costs
Gresham first time home buyers may be wondering how much closing costs typically are. On average, closing costs are about 3–4% of the purchase price of your home. Your lender will give you a specific number so you know exactly what to bring on closing day. These fees pay for important steps in the home-buying process, including:
- Home Inspection
- Credit Report
- Homeowner’s Insurance
You will need to be ready to pay the closing costs upon closing deal. So it’s important to have money for this saved ahead of time.
Get Preapproved for a Loan
Once you have your down payment saved, it’s time to secure the rest of your home’s costs by talking to a mortgage lender. Getting preapproved for a loan and having a preapproval letter when you start the search for your Gresham home gives you a huge edge. Preapproval shows sellers that you’re a serious buyer, which is a great way for first-time home buyers to get ahead in a competitive housing market. To get preapproved, your lender will need to verify your financial information (proof of income, taxes, etc.) and submit your loan for preliminary underwriting.
Stonebridge Mortgage Group Offers Guidance On All Mortgage Matters in Gresham
For professional assistance with mortgages and related services, look no further than Stonebridge Mortgage Group. You can rely on Stonebridge Mortgage Group to help guide you through the home buying process. We help get you pre-approved for a mortgage and help with your real estate loans and other mortgage solutions, both residential and commercial. Stonebridge Mortgage Group serves the greater Portland area and is located in Gresham, Oregon. Don’t wait to get quality assistance with buying your home!