4 Tips for Young First Time Buyers

4 Tips for Young First Time Buyers

There are four major financial items you should consider to be sure you are ready for homebuying in this economic environment.

The first is to be sure you are completely out of consumer debt, including car loans, credit cards, and student loans.

First time buyers should have three to six months of an emergency fund available, because there are usually expenses and financial circumstances that come up that are difficult to predict.

I also recommend a down payment of at least 5% to 10%. But I strongly encourage putting 20% down, if possible, to avoid paying for private mortgage insurance (PMI). PMI is a monthly fee that protects the lender if the borrower is unable to pay their mortgage.

Regarding house payments, I believe homebuyers should be sure their monthly payment will be no more than 25% of their take-home pay.

"Any more than that, and you run the risk of not having enough money left in your budget each month to put toward other important financial goals. "You'll be house poor."

I know how badly you want to be a homeowner and start building equity, But I talk to people every day who bought a house before taking these steps and wound up regretting it because they got stuck with a giant, expensive burden.

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I'm Keith Bailey Realtor - Century 21 AllPoints Realty - Destin to 30A

Keith Bailey Realtor
850-830-6771