You’ve been saving for a down payment and preparing for the financial responsibility of homeownership for a while. So at this point, you probably think you have all of your bases covered.
But the truth is, nobody knows what it’s like to own a home until they’ve bought one. And while homeownership is exciting, it comes with many challenges that you likely weren’t expecting.
4 Things to Know About Homeownership
It’s impossible to prepare for every aspect of homeownership, but you should take the time to educate yourself as best you can. Here are four things you may not know about buying a house:
1. You can qualify for a mortgage with bad credit
It’s no secret that having a high credit score is your best weapon when it comes to applying for a mortgage. A good credit score will ensure that you qualify for the best rates and will make the home buying process smoother.
But if your credit score is less than ideal, it’s possible that you can still qualify for a mortgage. If you meet the guidelines for a VA or FHA loan, then you could take out a mortgage with little to no down payment required.
With an FHA loan, you can take out a mortgage with a 3.5% down payment as long as your credit score is at least 580. If your credit score is 500 or higher, then you can take out a mortgage with a 10% down payment.
VA loans are one of the best options for current or former military members with poor credit. There are no down payment required, no primary mortgage insurance (PMI) requirements, and you’ll qualify for lower closing costs.
2. Closing costs add up more than you think
Most borrowers spend a lot of time thinking about what they need to save for a down payment. But many people completely overlook the closing costs.
Closing costs are the fees that come with purchasing a home, and they’re paid when you close on your home. Closing costs can vary greatly depending on where you live, the home you buy, and the lender you work with.
These fees typically range between 2% and 5% of the total cost of your home. So if you purchase a $250,000 home, you can expect to pay between $5,000 and $12,500 in closing costs.
You can try to negotiate these costs with the seller, but it’s unlikely you’ll get out of paying them altogether.
3. Your location matters
You probably have a very specific set of criteria in mind for the home you want to purchase. But have you given the same amount of thought to the location where you’ll be living? Because it matters a lot more than you think it does.
You should consider your priorities and where you’ll be happy living. For instance, are you going to be okay with a lengthy commute to work every day? Is it important to you that you live within walking distance of restaurants and shops?
It’s also a good idea to consider the neighborhood you’re moving into. Even if you don’t have kids, moving to a neighborhood in an excellent school district can greatly impact the resale value of your home.
4. Skimping on your home inspection can be a costly mistake
Once you find your perfect home, it can be tempting to move on it as quickly as possible. After all, you don’t want to waste time and risk losing the house to another buyer. But there is one thing you should never rush — the home inspection.
A home inspection is conducted by a trained professional and will give you an overview of the house’s current condition. Here are the structures inspectors typically check:
- Interior walls
- Heating and cooling
If the home inspector finds any potential problems, you should take the time to dig a bit deeper and figure out what’s going on. Ignoring possible issues can cost you a lot of money in the long run.