If you’re a first-time homebuyer in Keokuk or the surrounding area, we know some of the most common mistakes that others in your position have made when making their first big investment. We put a list together so you can consider each of these 5 things before buying a house.
#1) Affording a home vs affording a mortgage
Most first-time homebuyers jump at the opportunity at homeownership the moment they qualify for a mortgage. But if you’re new at this, understand that there’s a difference between affording a home and affording a mortgage. Just because you can afford a mortgage, it doesn’t always mean you can afford to own a home. There’s a whole range of other expenses involved, on top of your mortgage payments which include:
Homeowners association dues
Can you afford this long-term? A good rule of thumb for knowing if you’re ready for a mortgage is that your income should be at least 1/3 of the mortgage. Does that mortgage add up to your long-term capability to own a home?
#2) Get pre-qualified before looking for a house
Set your expectations straight from the start. If you’ve bought into the American Dream of owning a home, it can sometimes become an emotional roller coaster. It’s easy to get attached to a house while house-hunting. And while it’s good practice to shop around and experience different properties, what first-time homebuyers should do is get pre-qualified for a mortgage. From there, you can know which houses you can realistically pursue.
#3) Finances and Savings
If you’re buying a home, you’re well aware of the traditional route of paying down 20% of the mortgage. There are some programs in Keokuk where the required down payment is only 3.5%. Regardless of the down payment requirement, some new homebuyers make the mistake of depleting their entire savings to make a down payment.
If you pay less that 20% of the mortgage down payment, you’re required to pay for mortgage insurance. Some buyers prefer to pay the entire 20% of the down payment versus having to pay for mortgage insurance. Not having any savings cushion as a homeowner is very dangerous and would put you in a very delicate situation if you ever encounter any emergencies.
Also, during the time of the purchase, don’t make any other loan purchases. Since it takes 30 days for the home purchase to close, any big loan purchase made in that timeframe can affect the closing of your home.
#4) Trust the Experts and Ask for References
It’s important to get help from completely independent resources and professionals. Most new buyers are unaware of the difference between a real estate listing agent and a buyer’s agent. Listing agents will only show you what is listed with them, for example, so it’s to the new buyer’s best interest to seek information from independent resources across the board, whether it’s a mortgage lender, lawyer, realtor, or insurance agent. And don’t forget to ask for references.
#5) Consider Your Homeowners Insurance Premiums
Homeowners insurance can get complex. It’s good to get an estimate of what your premium might look like. Find a trusted independent insurance advisor and start to create a relationship with one. You can begin to understand the factors that affect homeowners insurance – this can include anything from location, previous claims filed, age of the home, and type of roof.
If you’re a first-time homebuyer in Keokuk, congratulations. We know it’s a very exciting time, and you’ve chosen a great community. We want you to be prepared and go through the process with as much as excitement and ease as possible.
About Ryan Ruffcorn
Ryan grew up in Keokuk, graduated from Keokuk Senior High, and started his agency in Keokuk from scratch in 2003 after having worked for one of the largest international accounting firms, KPMG, LLP.
Ryan is hardworking; his loyal and trustworthy character is exemplified by the way he does business. He thoroughly enjoys helping clients through the insurance buying process to secure coverage for their most valuable assets.