Are you ready to buy your first home?
Homeownership brings many benefits. When you buy your first home, you'll become part of a community and experience the security of owning the roof over your head.
You can get more information about these potential benefits and others in Wells Fargo Home Mortgage's My FirstHomeSM, an online learning experience that can help you decide if you're ready for homeownership.
As a homeowner, you may also be able to:
- Take control: Avoid rent increases and cancelled leases while creating a home that meets your needs and tastes.
- Build home equity: Grow your assets with the principal portion of your mortgage payments and with potential property value increases.
- Take advantage of tax benefits: Deduct mortgage interest and real estate property taxes on your income tax returns. (Consult a tax advisor regarding the deductibility of interest.)
- Build your credit: Create a strong credit history by making on-time mortgage payments.
What you can do to prepare to buy your first home
Create a financial plan
- Understand your credit needs and borrowing ability
- Know your credit history, assess your ability to make payments, and determine whether you can borrow using collateral such as the equity in your home
- Make a plan to get your credit in shape if necessary and establish a budget
- Check your credit history
- Compare your income and expenses
- Total the amount of your savings and other down payment sources
Estimate what you can spend
- Calculate your monthly payment. Use a payment calculator to estimate payments for various mortgage amounts and interest rates.
- The total amount you need is the sum of your down payment and your closing costs.
- If you have less than 20%, you will need private mortgage insurance (PMI) which protects the lender if a borrower stops paying the mortgage.
- Closing costs and prepaid expenses are also a necessary part of getting a mortgage.
Set a time frame
- Determine when you'd like to buy your home. Take into consideration your credit, cash flow, and savings.
Things to consider with homeownership
Homeownership is a serious and long-term commitment: financially, geographically, emotionally, and more. Give careful thought to these factors as well:
- Financial responsibility: You'll need to pay for utilities, maintenance, and repairs - on top of your mortgage payments, property taxes, and homeowners insurance.
- Potential risk: Real estate often increases in value over time, but not always. Your property value can also go down.
- Tighter ties: As a renter, you can pick up and move with short notice. When you own a home, selling it before moving on is more complicated.
Learn more about preparing for homeownership, and the mortgage benefits available to you, by visiting the Union PlusÂ® Mortgage program site.
Information is accurate as of the date of printing and is subject to change without notice. Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. Â©2013 Wells Fargo Bank N.A. All rights reserved. NMLSR ID 399801