Buying your first home, feels exciting and marking the beginning of a new chapter in your life! As you prepare to transition to homeownership, there are several things you need to know. That is why we put together this first-time homebuyer’s guide, to enable you to make the right decisions. Therefore, as you prepare to start the search for homes for sale in St. George, Utah, here is what you need!
1. Build an emergency fund and pay off all debts
Purchasing a house can be expensive as you will be expected to make monthly repayments on the loan that you have borrowed. You will need an emergency fund set aside, in anticipation of hard times as you repay the home purchase mortgage.
Therefore, before you start investing in St. George real estate, pay off your debts and grow your emergency fund. Make sure that you will have an emergency fund to cover for at least six months living expenses. If you will only have the home mortgage to repay and you have enough emergency funds, you should be in a great position. Consider taking a new loan in the middle of repaying a mortgage, might affect your eligibility for the home buying mortgage. In addition, if you have a large emergency fund in your bank, this also increases the credit score.
2. Check the monthly budget to determine the value of the house that you can afford
Avoid setting emotions on a beautiful property, before checking whether you will be able to pay off the loan. Therefore, consider the budget for other things like mortgage insurance, cost of maintaining the property and the closing costs. These are going to affect the monthly payments. St. George real estate market features properties at different costs. The objective should be purchasing a property that you can afford. In that regard, the monthly living expenses plus the housing maintenance costs need to be at least 25% of your monthly take-home pay. The St. George real estate tax rates and cost of homeowners insurance vary. Therefore, check with the real estate agent and the insurance company for the estimates so that you can calculate the value of the property that you can afford.
3. Save for a down payment
At this point, you have an emergency fund at the bank, all previous debts paid and you know the value of the property that you can afford. Depending on one’s income, some people choose to save a full amount. However, for others, St. George, Utah real estate mortgage is the way to go. If you are planning to take a mortgage, calculate the down payment, and focus on saving for that amount. Ensure that you have at least 20% in your account if you are going for conventional loans. With 20% saved for the down payment, you are exempted from paying the private mortgage insurance. The mortgage insurance is meant to protect the lender, in case a borrower defaults.
4. Understand the different mortgage types available in the market
If you have raised 20% down payment, you could qualify for the conventional home mortgage. If you are not able to afford the 20%, the government secured mortgages could be tempting. Remember that the no down payment and low down payment options will eventually cost you more as you have to pay for the mortgage insurance. Examples of the no to low down payment mortgage options available to St George Utah real estate buyers include adjustable-rate mortgages, the FHA loan, and VA loans. Each of these has a set of their own eligibility requirements.
5. Talk to the mortgage lenders
The mortgage lenders will have different interest rates. The interest rate will affect your capability to repay the loan. Talk to the loan officers and seek to understand the different products and the amounts that they can lend you for the home purchase.
6. Apply for the pre-approval letter
The pre-approval letter is meant to kick-start the property negotiations. Therefore, upon agreeing with the lender on the amount they can offer, it is time to start identifying the St. George homes for sale.
7. Meet the realtors
Check the listings on houses for sale in St. George, Utah. Meet the realtors and start the closing cost negotiations. Ensure that you identify a good neighborhood and you find the house that meets your needs. Do not offer a buying price without researching the market rates.
8. Prepare for the closing
Once you and the home seller reach an agreement, prepare the necessary documentation. Read everything on the documentation and be sure to ask questions to ensure you understand the agreement fully.
9. Loan approval and final transactions
Ask the lender to approve the loan, and upon receiving the cash in your account, wire the money to the seller’s account. You are now ready to move in and settle in the newly purchased property.
The process of buying a new home may seem complicated, but if you follow the steps above and reach out with any questions, it won’t be as overwhelming as you may think; we promise!