Four Rules for Buying a Home that are Popular Again

There was a time not too long ago when the common sense rules for buying a home flew out the window. People were borrowing more than they could afford and buying homes that they could not pay for. We all know how that ended. Now some of the more popular and common sense rules of buying a home are making a comeback. Here are four of those rules.

Down Payments are Important

Putting a significant down payment on your new home is a great way to get yourself emotionally and financially invested in your purchase. During the subprime mortgage days, many lenders were giving loans to buyers who had little to no down payment. But the more you put down on your home, the less you will have to pay on your mortgage each month. It also gives you equity in the home that you can tap into if you need it for emergency expenses.

Don't Borrow More Than You Can Afford

Most first-time buyers think that if they get approved for a certain amount, that's the amount of money they should borrow. But they do not consider other costs, such as closing costs, insurance and taxes. Don't buy a home that is priced at the amount the lender approves for you. Know what you can afford each month and go by that instead.

Think Long Term

The best way to get the most for your money right now is to plan to stay in your home for several years. If you move too soon, you won't be able to recoup your closing costs and other fees so you will come out of the deal having lost money. To make it worth moving, you should stay in your home for no less than five years or you are likely to lose money.

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