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Buying a Home
Whether if this is your first home, or you are considering buying a secondary property, buying a home is a serious endeavor. Start by defining your goals. Consider where you want to live, the features you’re looking for, what you can afford, and a realistic date for having the money you’ll need. Whenever you’re ready to buy a home, we’re here to help. Learn more about our mortgage lending options.
The Cost of Buying
The actual amount you’ll spend to buy a home depends on the part of the country you live in and the type of home you want. While the dollar amount will vary, certain guidelines apply wherever you buy.
It’s likely that you will need cash for a down payment and will get a mortgage—a long-term loan you use to buy a home. Traditionally the down payment has been between 10% and 20% of the sale price, though there are some government sponsored programs that let you put a smaller amount down. But the less you put down, the larger your mortgage payments will be and the greater the risk that you will default, or not be able to make your payments.
What a mortgage costs depends on three factors: the principal, or amount you borrow, the finance charge you pay for using the money, and the term, or length of time the mortgage lasts. You should also expect to pay an up-front interest charge to your lender, of one or more points. A point is usually 1% of the mortgage amount.
When you apply for a mortgage, you will have to qualify to be able to borrow. Typically, lenders require you to spend no more than 28% of your monthly income to repay the combined total of your mortgage loan, property taxes, and homeowners’ insurance. For example, if your gross pay is $54,000 a year, or $4,500 a month, your housing expenses could be up to $1,260.
Most lenders also consider your other financial responsibilities, including car payments, personal loans, college loans, and other debts. They don’t want these expenses—plus your housing costs—to be more than about 36% of your monthly income. In short, they want to be sure you’ll be able to pay your mortgage before they let you borrow.
Using a Real Estate Agent
A real estate agent can provide valuable assistance in buying a home. An agent knows what’s available in a particular neighborhood, what the price trends are, and how current asking prices relate to actual sales prices.
Most lenders also consider your other financial responsibilities, including car payments, personal loans, college loans, and other debts.
You can look for an agent the same way you look for a financial planner or other professional. Ask your friends and family for recommendations, check out your local resources and various real estate websites, and interview several people before you decide on the person to work with. It could turn out to be an extended relationship, and you want it to be a productive one.
Traditional real estate agents and the real estate firms that list homes for sale are paid by the seller and represent the seller’s interest. That doesn’t mean that, as a buyer, you can’t establish a good relationship with sellers’ agents or use them to find a home at a price you can afford. Some buyers, though, prefer to hire buyers’ agents to represent their interests and negotiate the sale price and contract terms.
What Type of Mortgage is Right for You
There are a variety of different types of mortgage loans available – and finding the right one for you depends on where you are in your buying journey, how much you can put down, how risk averse you are and how much you need to borrow.
Renting versus Buying
Because purchasing a home is a huge investment, you need to take the time to weigh the benefits of renting versus buying a residence.
|Renting may be a smart financial move for these reasons:
Buying a home has its advantages as well:
Ready to Talk to Someone?
Once you are ready to take the plunge, we are here to help. WesBanco’s Mortgage Specialists are experienced, knowledgeable professionals who are available to provide information to individuals or families wanting to purchase, refinance or renovate a home. Let us get you on the right path to owning a home of your own. Click the button below to find a lender in your area to speak with.
Content is for informational purposes only and is not intended to provide legal or financial advice. The views and opinions expressed do not necessarily represent the views and opinions of WesBanco.
While we hope you find this content useful, it is only intended to serve as a starting point. Your next step is to speak with a qualified, licensed professional who can provide advice tailored to your individual circumstances. Nothing in this article, nor in any associated resources, should be construed as financial or legal advice. Furthermore, while we have made good faith efforts to ensure that the information presented was correct as of the date the content was prepared, we are unable to guarantee that it remains accurate today.
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