The Rules of Homebuying
The American dream of homeownership is a tradition that has lasted for generations. In today’s market, there are plenty of people who have gotten in well over their heads by trying to attain that dream. Here at the Knoxville movers, we want to ensure that you know what you are getting yourself into when you want to buy a home. Follow our tips and know what money rules apply to obtaining a healthy mortgage.
The Down Payment. Generally, 20 percent is the golden amount you should be ready to pay for a down payment on your home. Putting down a chunk that significant shows you have saved and prepared for the homeowning process, and that you are financially ready to take on a mortgage. Many people and institutions who didn’t follow this 20 percent rule experienced trouble when the market crashed.
Know Your Budget. After the down payment, you will have to pay monthly towards your mortgage—make sure it is an amount that is feasible and does not overextend your budget. Recurring monthly payments will have to be made for the next 15-30 years, and a 15 year mortgage is preferred to save the accumulating interest on a 30 year mortgage which ends up equaling three times as much interest.
Avoid condos. Except in cities where condos are the only option, condos are generally not recommended. Why? Because many additional fees accrue with a condo—namely association fees and assessment fees. Association fees are dangerous because they can be raised at any time if the board votes it into effect. In addition, you are limited by renovations and work done on your unit as it must go through board approval processes. Financing for a condo mortgage is also more complicated than for a standalone single-family home.
Whichever style of home you decide to buy, be sure you have your finances in order and will be ready to take on the financial commitment of owning a home. Also, you have to be committed to a location—while it is fairly easy to move from a rental space it becomes significantly more complicated when you own the property. Leasing out your place also takes a certain amount of dedication and work, so that’s not always a recommended option.