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American Housing Month

By Heather Cherry • June 10, 2020


Things to Do Before You Buy Your Dream Home

Throughout June, NexTier Bank is celebrating American Housing Month. A time to highlight the variety of housing options available to consumers. Different types of housing will meet different needs. Whether you choose to rent or own your home, we support your housing goals.

We believe in sharing resources and educating our customers. We can help you understand different mortgage lending options, personal budgeting, saving, or how a free checking account can help you meet your financial goals.

If you are considering becoming a homeowner, here are things to do before you buy your dream home.

What are the advantages of owning a home?

Home-ownership is a long-term investment. Depending on the home and financing, your home will likely accrue in value over time. The amount will increase even more if you do renovations or updates. When your home is worth more than you owe, you have equity. This equity could help you with significant home improvements, consolidate debts, or buy a larger home when you sell.

Being a homeowner also means you get a federal tax benefit. For most homeowners, mortgage interest is tax-deductible, as is interest on home equity loans. Consult with your tax professional for more information before your home purchase to understand how this affects you.

Owning a home offers you the opportunity to customize. You can renovate as you desire or decorate to match your unique style.

You will have (in most cases) increased privacy. You definitely won’t have to answer to any landlords or property managers.

Stability is another advantage of home-ownership. Buying a home is a good idea if you plan to stay in the area for at least five years.

Are there disadvantages to owning a home?

Like everything, there are good and bad aspects. Owning a home is no different.

Buying a home requires significant upfront costs. Depending on your loan type, you may be required to pay anywhere from two to 20 percent of the purchase price as a down payment. You will also need to pay for property taxes, mortgage insurance, home inspection, homeowner’s insurance premiums, and other closing costs before mortgage finalization.

Depending on your income and personal budget, you will likely want to start saving for your dream home at least six to 12 months in advance.

Other disadvantages could include less mobility and maintenance costs. Home equity is a perk of home-ownership, but it can also be a disadvantage because it grows slowly. Its growth is almost nonexistent in the first years of mortgage origination.

If home-ownership is right for you, here is what you can do now to prepare for buying your dream home:

Check your credit score. Is your credit in good standing? Credit scores are essential and can determine your interest rates or lending options. Your credit score also determines your ability to secure insurance or utilities for your new home.

Get your finances in order. Take steps to cut unnecessary spending now or try to earn extra cash. Both options will help you start saving for your dream home. Now might be the time to create a personal budget to help you meet your financial goals.

Examine your financing options. There are a variety of home mortgages available with different qualifying factors. Research different home mortgage options with lenders. Be sure to ask how the various loans will affect your upfront costs and mortgage payment in the long-term.

Prospect neighborhoods. Visit the areas where you’d like to live. If they’re willing, ask the neighbors to discuss their experience. Their input may help you make the best decision when it comes time to buy.

Interview real estate agents. All real estate agents approach buying and selling differently. Talk with multiple real estate agents to see which one aligns the best with your wants, needs, or wishes.

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