If you’re thinking about purchasing a home, there are a few things you should consider.

Most people start day-dreaming about their dream house before they’ve begun planning financially. When you’re ready to start planning to buy a home, you really need to consider a few things and we will discuss them below!

  1. How much can you afford?

Before you get attached to your dream house, make sure it falls within your price range. There are many home affordability calculators available online. Although these may not be 100% accurate, they will give you a good starting point of what you could comfortably afford.

  1. Don’t max out your pre-approval.

Remember, when you are given a pre-approval from a lender, they are approving you for the maximum you could possibly afford. The amount given does not factor in any extra monthly expenses or future costly issues that may arise from homeownership, such as your furnace breaking. With this in mind, you will want to look at properties that cost less than the amount that you were approved for in order to avoid stretching your budget too thin and causing financial stress.

  1. Pick the right neighborhood.

Did you know that tax costs can vary by zipcode? Taxes can increase your monthly payment a significant amount, so make sure you know the tax costs for the area you are considering purchasing within. Sometimes you may find that purchasing a house in the zip code “next door” could make the tax costs much more affordable for your budget.

The neighborhood you purchase your house in could also affect the value of your home. You’ll want to look into schools in the area, safety and crime statistics, and distance from important amenities (such as the grocery store, hospitals, etc). You may even try driving through the neighborhood at different times of the day to get a feel for noise and traffic levels of the area you plan on moving into. All of these can affect the value of the home.

  1. Can you afford the down payment?

You will want to begin saving for a down payment early on in your budgeting process. Many people budget for putting 20% down on their home, but today’s lenders do not always require 20% down. Make note that if your down payment is less than 20% you could possibly have higher costs and be required to pay for private mortgage insurance. A down payment can be a hefty cost, but remember, sometimes adding more onto your down payment can impact your monthly payment significantly in the end.

Also consider reviewing what state and federal programs are available to assist in home buying in your area. For example, in Grand Rapids, MI there are certain parts that have down payment assistance up to $5,000.00 just for buying a home on a certain street! There are various helpful mortgage programs out there to help home buyers that may struggle with saving up for a down payment as well.

  1. What about closing costs?

While most people have thought through budgeting for their future down payment, some forget to consider saving up for the money required to close on their mortgage. Average closing costs tend to run between 2% and 5% of your home loan amount. Homeowners insurance, home inspections, and title searches are some closing expenses that you can shop around to compare prices. On top of that, you can also cover some of the closing costs by asking the seller to pay for a portion or by negotiating it into you real estate agent’s commission. This should all be considered when preparing your budget for savings.

  1. After move-in expenses.

Imagine, you have purchased your new house and are ready to move in, but there is no furniture and the appliances are out dated! This is something you will have to consider when preparing for future home ownership. Once you move in, it is likely that you may want to improve the space or fill it with your own personal touch. Make sure to budget for after move-in expenses such as furniture, paint, appliances, rugs, or any other updates you may want to bring in to your new home.

These are just a few tips we would like to offer you when considering to buy a home. Please reach out to a mortgage specialist and allow them to advise you further, or even find out what home loan you may qualify for. Our mortgage specialists, Cyndi Schurr and Miranda Mann are great sources for information and here to help you finance your perfect home.

To contact our mortgage department with additional questions, please call 616.261.5657 or, visit our mortgage page to apply online.

Happy house hunting!

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