If you’ve spent the majority of your life renting, you know that homeownership is a big change. You can not just call maintenance in the middle of the night when there’s a problem, and now, you’re going to have to do your own lawn care. As a first-time homeowner, there are some things you’ll need to know. Here are just a few things long-time renters should know about their first mortgage.
You’ll Need Maintenance Savings
When you own a home, you’re the one responsible for maintenance and repairs. These can sideswipe the financial well-being of any past renter when something unexpected comes up.
You should be putting aside money each month or each paycheck in a special account designated for repairs and maintenance of your home.
If you’re not sure how much to set aside, you’ll need to sit down and plan out your expected maintenance costs for the coming years.
You’ll Owe A Sizable Down Payment
When you apply to rent a property, you can expect to pay a month’s rent upfront in what is called a security deposit. When you leave the apartment, you get your deposit back, assuming you don’t damage anything.
With a mortgage lender, you’re going to need to put down a sizeable chunk of change to get your mortgage. It won’t just equate to one mortgage payment. Rather, you can expect to pay anywhere from 5 to 25 percent of the purchase price of the home.
Your real estate agent can help connect you with potential lenders who can assist you in learning about how much you have to put down.
Payments Differ with Terms
When you apply for a mortgage, you’re typically given multiple options in regards to the term. This is the length of time you’ll be expected to pay the balance off over. The most common terms are 10, 15, 20, and 30 years. The longer your term, the lower your monthly payment is going to be, but the more interest you can expect to pay over the life of your mortgage loan.
It Will Likely Be Cheaper
When it comes to your monthly mortgage payment, you may find that it’s actually cheaper than your rent. Remember that your landlord had to pay for things like insurance, maintenance, and still net a profit.
When you finance your own home, you’re only expected to pay for the loan and insurance. Most financial lenders will group in your insurance payment with your mortgage payment for one monthly premium amount to keep things simple for homeowners.
other valuable tips:
First-Time Homeowner? How to Educate Yourself about Mortgages
Making the decision to purchase your first home can be exciting. If you’ve been renting all of your life, it can be a big chance. Getting prepared is as easy as understanding the four facts explained above.
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