So, you're ready to purchase a new home for your growing family? Great! Young families have special considerations when it comes to buying a home, and each family is unique in what is important for them. So here are some things to think about:
Size and layout of your new home
- One thing to consider is any future needs. For example, if you know that you plan to have more children, do you need to plan for extra space later on for bedrooms or dining?
- If you’re the type of family who loves to have company with lots of kids sacked out on the floor in sleeping bags, then maybe a house with a finished basement or a loft is just the place.
- Do you prefer bedrooms on separate floors, so night-owl parents don't disturb sleeping children?
Yard space and upkeep
- Do you want plenty of yard space for family softball games, the long-promised playset dad said he'd build or a future swimming pool?
- Do you want a fenced-in yard to keep young children safe or to allow family pets to run free and off-leash?
- Perhaps free time for making memories is more important to you than mowing and mulching. A townhome or house with a smaller yard might be your better choice.
Daycare, schools and neighborhood
- Take time to research and check references for local daycares and preschools. Even if your children are younger, look into nearby elementary, middle and high schools. While some school districts allow families to choose which schools they want to attend, others do not.
- If your children are involved in sports, 4-H or other youth activities, see if there are similar activities nearby to help ease their transition.
- You’ll also want to check out the neighborhood you're considering. Are there other young families, so your children will have neighbors to play with?
Getting your finances in order
Once you’ve figured out what kind of home will fit your family’s lifestyle and future needs, your next step is to figure out what you can afford. Here are some things to consider:
How’s your credit score?Banks and mortgage companies will want to see a credit score that meets their minimum acceptable score. Usually this is anywhere from 580 to 640. While a score of 740 or higher ensures that you get the best (that is, lowest) possible rate, many families qualify for a mortgage with a lower score, especially when they are purchasing their first home.
How much do you have saved for a down payment?
- The general rule with mortgages is that a 20% down payment is required to get the best possible rate and avoid the extra charge for Private Mortgage Insurance (PMI). PMI is an insurance policy for which you, as the borrower, pay a premium that will make sure the bank is repaid if you default (that is don’t pay) on your loan. However, like any rule, there are exceptions.
- There are some “zero-down” options available through government programs, as well as many opportunities for you to put as little as 3% of your purchase price toward the down payment for your home.
- If this is your family’s first home, many first-time homebuyers receive a gift from a family member to help them purchase their home. This is a perfectly acceptable form of down payment, but it must be accurately recorded and accounted for in the application. If you think that you might receive this form of assistance, then speak with your mortgage officer about the best way to structure the gift, so that it can be used to help with your down payment or closing costs.
- If you’ve owned a home within the past three years, you can count on making a down payment of at least 5%. Remember, down payment funds can take many forms, including cash (from a checking or savings account), a gift or secured funds, such as from a Home Equity Line of Credit.
Will there be any income changes in your family?
If your income currently comes from two persons, but future plans call for a leave of absence (or if one partner elects to stay home, in lieu of work), then you’ll want to take that into account when you purchase your new home. While the bank will use the information previously mentioned elsewhere to calculate your current ability to afford a mortgage payment, you should still consider the burden of a larger mortgage payment if you anticipate a decrease in family income.
So, what now?
Most families dream of owning a home where they can raise children and make memories. However, going through the process of finding and financing the right home can be stressful, especially when you're already dealing with family responsibilities and short on time.
That's why it's important to also put thought into your choice of realtor and mortgage lender. Look for a mortgage lender that gives you the opportunity to start the mortgage application process online (when it's convenient for you). And ask questions about their expertise, resources, range of mortgage solutions and history of helping families like yours. You want a mortgage professional who can help you choose the right mortgage financing for your situation, lessen your stress and help guide your family into the home of your dreams.
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