So you’ve decided that you want to start searching for your first home in the Green Bay and N.E. Wisconsin real estate market. Congratulations! Buying a home for the first time is an exciting experience unlike no other. Though purchasing your first home is a major achievement that you’ll never forget, taking the necessary steps to do so can be a little confusing.
Without help from realtors in Green Bay, WI, and the right information, trying to purchase a home can become frustrating very quickly. Alternatively, you could purchase your first home on impulse without keeping your financial goals in mind. Doing so could leave you with a mortgage you’ll be paying forever.
Don’t want that to be you? Don’t worry — as long as you live by these house-buying rules, you’ll be able to tackle the real estate market in Green Bay and N.E. Wisconsin without a scratch.
Enter the Market Debt-Free
As you probably could have guessed, owning your own property isn’t cheap — especially when you’re a first-time owner. In fact, it’s much pricier than paying rent, even if your mortgage payments are cheaper than what you might be paying in rent now. Why? When you own your own home, you’re also responsible for making payments for maintenance and upkeep.
When you purchase a home, you need to think beyond your immediate finances. Sure, you might be able to afford a house, but will you be able to keep up with payments for as long as you own it? That’s why it’s crucial to enter the market debt-free, and with cash to spare. Pay off any pre-existing debts, whether they’re major loans or credit card debts. Existing debt could delay your mortgage approval. Even if you do get approved, your rates may not be as good as they could have been, had your credit been better. Once you’ve done that, build up an emergency fund that can cover at least three months of expenses, should anything happen to your financial security.
Be Reasonable About What You Can Afford
Before you begin looking at homes for sale in Green Bay WI, sit down and think about what you can really afford, before you fall in love with a home that you can’t. In your budget, you’ll need to consider the cost of the down-payment, moving costs, and monthly expenses like HOA fees, taxes, utilities, and insurance, among other costs. If you budget wisely, your monthly expenses won’t take up more than 25 percent of your monthly income. If you need help finding your ideal price, your realtor will help find a number that works for you.
Save Up For The Down Payment
Some people are lucky enough to pay for a house in full. Most of us aren’t so lucky. You’ll likely need to pay a down payment and pay off the rest of your home with a mortgage loan. Ideally, you should pay off as much of the house as you can to minimize the cost of monthly mortgage payments. At the very least, you’ll want to save enough money to pay for a minimum down payment of 20%. When you pay for at least 20% of the agreed price, your mortgage provider won’t require you to pay private mortgage insurance. PMI protects the lender in the event that you can’t make your payments and foreclose. PMI costs an average of 1% of the total loan value, and lenders add it to your monthly mortgage payments.
Not able to make a 20% down payment? There are several programs available to first-time homebuyers that enable them to make a down payment under 10%. However, these programs are tricky and it’s best to avoid them if you can. In the long term, they’ll only cost you more money and lengthen the term of your mortgage.
Stay away from adjustable rate mortgages, FHA loans, and VA loans — these payment plans offer a loan at little to no interest, but they come with hefty fees, PMI fees, and sliding rates of interest that will cost you more than usual rates. Realtors most often recommend a fixed-rate mortgage on a 15-year term, in which you’ll make an initial 20% down payment. This plan saves you thousands in interest and ensures a low and permanent interest rate. 30-year mortgages are tempting because of their lower monthly payments, but your realtor will show you that paying off your mortgage in 15 years actually saves you tons more in the long run.
Don’t Forget the Closing Costs
After you make your down payment, you’ll have to have enough money saved up for closing costs. This is something that throws many new home buyers in for a loop, but closing costs aren’t something you can work your way around! Unsure of how to prepare yourself for what is to come? Keep in mind that your closing costs amount to about 4% of your purchase price. The number won’t be vague for too long — your lender will provide a more specific amount so that you’ll be prepared on closing day. This expense consists of appraisal, home inspection, credit report, legal, and insurance fees.
Be Thorough During Open Houses
Once you’ve worked out your budget, it’s time to go house hunting. There are plenty of homes to choose from in the Green Bay, WI, real estate market, so don’t head into immediate negotiations for the first one you like. There may be other options that are even better for you than your first pick. Schedule multiple viewings, and don’t be afraid to open every door drawer, and cabinet. Once you’ve done some thinking, speak to your realtor about making a competitive offer.
Ready to start your house hunt? Speak to your realtors in Green Bay and N.E. Wisconsin!