5 Things You Should Know Before Purchasing Your First Home
If you’re buying your first home, it can be exciting, but it can be overwhelming, too. Don’t stress just yet! If you know the right things to do to prepare, you can purchase your first home in a way that benefits you, your family and your pocketbook.
I spoke with Minnie Minor, a Financial Consultant with the Oink Group Inc., an African-American financial services firm. Minor shared five things you should know before purchasing your first home to make sure it’s the right investment.
BlackDoctor.org: What is the difference between an interest rate and APR?
Minnie: People should know the difference between an APR and interest rate. Here it is in simple terms. The mortgage interest rate is the cost a homeowner pays each year to borrow money for a mortgage and expressed as a percentage rate.
However, an APR or an annual percentage rate, reflects the mortgage interest rate and other charges. When a person takes out a mortgage, the APR reflects not just the interest rate, but also the points, mortgage broker fees, and other expenses you have to pay to get the loan. This is why the APR is usually higher than your interest rate.
BlackDoctor.org: What should a first-time homebuyer do before purchasing a home?
Minnie: Homeowners should have a game plan when buying a home. They should ask the following questions: Is it a short or long-term investment? Can they cover the mortgage comfortably with one income if it is a couple making the purchase? Can you afford your mortgage with one paycheck? Also, as you go through the process, validate everything you are told. This includes information about the seller, appraiser, real estate agent, lawyer and the bank.