Mortgage and Home Buying 101

Home ownership is an incredibly hot topic among even those in their low-to-mid twenties here in St. Louis. Even in a tough marketplace buying a home still seems to be a very high priority to many of our peers. A lot of my friends and young relatives have the crazy must-buy-a-HOUSE itch and if you are thinking about making this move yourself soon (or ever!) here are a few things to start chewing on as you begin learning about your options:

1) Just because you can, doesn't mean you necessarily SHOULD finance without a down payment.

Certain types of mortgages basically let you finance your home with no money down -- but this is still a bad idea! Putting money into a solid down payment up front can save you money and also give you peace of mind that you're capable of managing your money awesomely enough to get a respectable amount together and deal with any crazy money situations that may come at you!

2) Owning a home is more expensive than you may think.

So you are looking at a home at a certain price point. You loosely bake in a percentage on top of that based on what the more recent mortgage rates are or maybe you've even run the numbers through a rate calculator against your salary or combined salaries. After just THAT you have your sales taxes, property taxes and the cost of any maintenance or upgrades done to the home. And in the case of many young folks I know that have taken this plunge & were getting ready to move to their NEXT home, the upgrades they would need to make only about 5 years later to get their house up to code will be very expensive, now. Many have ended up stuck as the property values dropped across the country.

3) Owning a home is a different commitment, now.

Do any of your parents or grandparents talk about their "starter" home or their "5-10 year" homes? The idea of such a temporary home that was popular in the upwardly mobile 80s and 90s has been indefinitely extended for a lot of young people I know. Between the dropping values of property across the country and the cost of remodeling and code upgrades that would be necessary to sell, many young couples are now feeling pretty stuck.

I would encourage anyone shopping for a home now to take great care in researching their options STARTING by being honest with their income and working with a Financial Planner or Mortgage Representative (NOT a Real Estate Agent!) to see what amount is actually comfortable for them.

Next, they should level with that price point, thoughtfully scout locations, consider costs beyond financing and bear in mind the possiblity of near permanence of this new residence right now.

If this is you and you have questions, please let me know! Vantage has a great mortgage department and I'd love to connect with someone who can guide you well. Also, please visit vcu.mortgagewebcenter.com for daily rates and if you're feeling bold. to go ahead and apply for a rate quote!

Also, check out these other great resources on thinking about financing a home:

The True Long-Term Costs of Home Ownership

If You Ask "What's My Monthly Payment?" You're Asking The Wrong Question

Jenn