Buying your first home?

You’ve decided that’s it’s time to buy your first home. Congratulations. You are on your way to fulfilling your dreams.

Before you start house hunting though, you should have a number of things in place.

You should be saving for the down payment (a down payment can be about 20% of the price of the house) and the closing costs. Simultaneously, you should be getting your credit rating as high as possible, so you can get a favorable interest rate on your mortgage.

You’ll also need to decide where you want to live. Do you have specific neighborhoods in mind? Are school districts a factor in your decision? How large a house do you need for your family? Do you expect to have more children? Do you want a single-family dwelling, or will a condo be fine?

These are questions that will affect the kind of home you will purchase.

Talk to local real estate agents to get ideas on how much homes go for in your area. Find out what they think you can afford. Ask a lot of questions, and become well-versed in house-buying by the time you are ready.

Also, talk to your banker, and shop around for mortgage rates. Getting pre-approved for a mortgage can make the buying process quicker and smoother.

Calculating how much you can afford to spend involves estimating your income.

Are you counting on two salaries or one?

Your calculations also should take into consideration your debt level, real estate taxes in your area and the cost of a mortgage.

Many banks require that your monthly mortgage payment not be higher than a specified percentage of your income and that you have three to five months of mortgage payments set aside in savings.

Use a mortgage calculator. Several are available online, and a mortgage calculator will help you create a realistic budget.

Another important part of the equation will be life insurance to protect your family and enable them to handle the mortgage payments should something happen to you. The bank will have mortgage insurance built into your monthly payments, but that insurance covers the bank’s liability only. Your family will not be able to replace your income unless you protect them with life insurance.

You don’t want your dreams to evaporate or your family’s dreams to disappear and not be fulfilled.

Claire Damgaard is an agent with New York Life Insurance Co. in Dubuque. To learn more contact her at 563-581-5702 or

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