Buying your first home is one of the biggest financial decisions you will ever make, so how do you know if you are ready? There are a lot of things to consider before taking the plunge, but fortunately for you, our team at Dwell Music City is here to help you every step of the way.
Things to Remember When Buying in Nashville
First, consider if you really want to purchase property. If you are not planning to stay in the area for more than 5 years, you could be better off renting. On the other hand, if your career is stable and you can see yourself putting roots down in the area, then buying is probably your best option.
Prioritize the type of home you want to purchase. Do you have growing kids who will need lots of space and a yard to play in? If so, you will want to consider the school district your new home is in. If you are a young professional, you might want to look at lofts or townhomes. Smaller spaces require less maintenance, so you will be able to spend more time enjoying the city and less time worrying about repairing your roof.
Before you start to get too serious about looking at properties, talk to a mortgage broker and see what kind of loan you qualify for. Typically, lenders will look for you to have a debt to income ratio that is less than 43%. That is to say, all of your monthly debt payments (auto loan, credit card, etc.) should be less than 43% of your monthly income. Lower is even better. Also, consider the amount of cash you will be able to front for a down payment. Lenders typically require a down payment that is 3.5% to 5% of the home’s value. However, if you can come up with a 20% down payment, you can avoid paying PMI. PMI is an additional cost that builds you no equity, so it is smart to avoid it if you can.
In addition to a hefty down payment, it is important to have cash reserves available for unexpected expenses. While owning a home can be a rewarding experience, it can also be an expensive one. You can’t plan for the furnace to go out or a pipe to burst; you simply have to be prepared for any eventuality.
Getting a Realtor® early in the process can help save you headaches farther down the road. Especially if you are a first time home buyer, having an experienced professional by your side can make the entire process much smoother. They will be able to help you navigate the maze of forms, inspections, and negotiations that come along with buying a home.
Once you have secured financing, hired a Realtor®, and chosen a neighborhood, it is time to begin looking at properties. Set up appointments and visit as many homes as possible. Make sure you know what your priorities are and what features you can live with that. Once you choose a property, you can sign on the dotted line and be well on your way to becoming a homeowner.