Five tips for buying your first home


By Drew Watson - Watson, Chaney & Associates



Drew Watson


Are you dreaming about moving into your first home? While home hunting can be exciting, the process of buying a home can be somewhat challenging. Purchasing a home is a big financial commitment—potentially one of the biggest purchases you’ll make in your lifetime. With some planning, you can be ready to commit to a home with confidence. Here are some tips to help you get your finances ready for purchasing a home.

Determine your down payment and monthly housing cost. In most cases, you’ll need a minimum down payment of 10-15 percent. However, it can be advantageous to make a larger payment to reduce the interest you’ll pay and avoid fees attached to low-down-payment loans. As a benchmark, your down payment generally needs to be at least 20 percent to avoid Private Mortgage Insurance (PMI). Maybe you’re one of the lucky ones with a generous relative willing to help with your down payment. If that’s the case, ask your lender about rules pertaining to cash gifts. You can determine your monthly housing cost by adding the cost of your mortgage payment, taxes and homeowners insurance. Be sure to look at the total monthly housing cost before purchasing a home to make sure it fits into your overall budget.

Get preapproved for a home loan. With preapproval in hand from a reputable mortgage company, your offer has a better chance of being accepted. Plus, you may be able to shorten the closing period since the loan approval process has been completed. Keep in mind that getting prequalified for a loan is not the same as obtaining preapproval. Prequalification is merely an estimate of how much you may be eligible to borrow based on self-reported income information—it is not a guarantee you will receive a loan. You are still required to undergo an approval process.

Approach fixer-uppers with caution. Unless you are confident the house you’re buying has been deeply discounted based on the current housing prices in your area, you may place yourself at greater financial risk if your new home requires a lot of work. To avoid over extending yourself, look for a home that is in good shape and will stay that way for the foreseeable future. However, be realistic about what you can afford. If you have the time and know-how to retile the bathroom, paint the living room or enhance the landscaping, a moderate fixer-upper could be worth the financial investment.

Limit your demands. If you want to make a compelling offer, particularly in a strong real estate market, you may want to be selective about the conditions you’re adding to your offer. An inspection contingency is smart but asking for extensive repairs may tip the scales in favor of another buyer who is less demanding.

Do your research so you’re ready to act. Buying a home can be a very emotional decision and it’s important to go into the process well prepared. Take some time to lay out your priorities and research the market. What’s most important to you long-term—resale value, location, school district, number of bedrooms? Be practical about what you can truly afford and take the time to obtain preapproval from your bank or mortgage company. When you start seriously looking, you may have to act fast if you find the perfect house. If you’re prepared and thoughtful at the beginning of the process, you’ll be in a better position to make the right move.

Drew Watson
http://gcnewsgazette.com/wp-content/uploads/2016/06/web1_Drew-Watson-3.jpgDrew Watson

By Drew Watson

Watson, Chaney & Associates

William “Drew” Watson CFP® is a Financial Advisor and Private Wealth Advisor with Ameriprise Financial Services, Inc. in Owensboro, KY. He specializes in fee-based financial planning and asset management strategies and has been in practice for more than 20 years. To contact us by phone, please call 270-684-8424 or by mail at 111 West 3rd St., Owensboro, KY 42303. You may also visit our website at www.williamawatson.com.

William “Drew” Watson CFP® is a Financial Advisor and Private Wealth Advisor with Ameriprise Financial Services, Inc. in Owensboro, KY. He specializes in fee-based financial planning and asset management strategies and has been in practice for more than 20 years. To contact us by phone, please call 270-684-8424 or by mail at 111 West 3rd St., Owensboro, KY 42303. You may also visit our website at www.williamawatson.com.

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