1st Time Home Buyer
Hi Terry,
Our son, aged 31, wants to get out of his apartment and buy his first home. How does he know if he is financially set to do so?
Terry Says
He should get “pre-approved” for a mortgage loan. They will look at his credit score and history, his income, and how much money he has saved for a down payment — and then they will tell him how much he can pay for a home, based on the amount of mortgage they will give him.
As a general rule, he should have saved at least a 20% down payment — because although there are lower down payment loans, they require PMI (mortgage insurance that protects the lender) and that could add $100 a month of more to the payment — limiting the price of the home he can buy.
Check your state website for first time homebuyer programs. Some have help with down payments for first-time buyers. But that is typically for homes in lower-income zipcodes. In Illinois, check the Illinois Housing Development Authority – Here’s a link directly to that page. But almost every state offers some kind of first-time buyers program.
If you’re in Chicago, stop in at a Wintrust Bank. They’re very good about that kind of thing. Or go online to GuaranteedRate.com or RocketMortgage.com.
