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To Buy or Not to Buy: Top 5 Questions to Prepare First Time Homebuyers

Posted on February 18, 2022

Buying a home is an important life milestone. Some may even say a part of the American Dream. It’s an exciting venture for first time homebuyers, but it could be an overwhelming process if you’re not properly prepared. Home ownership is a significant investment that involves creating a budget that meets all of your financial obligations.

The Merrimack encourages first time homebuyers to consider these five questions before choosing a home.

1. How much money do you have saved?

First things first, sit down and evaluate your personal finances. When determining how much you have for a down payment, it’s important to factor in your savings, income, assets, as well as the rising costs of goods.

Down payments are typically 5 to 20 percent of the price of the home. But don’t exhaust all of your funds. It’s a good idea to maintain an emergency fund to cover three to six months of living expenses.

2. How much debt do you have?

Consider all of your current and expected financial obligations such as car payments and insurance, credit card debt, and student loans. Make sure you will be able to make all the payments in addition to the cost of your new home. Failure to pay your bills on time will hurt your credit score and can cause a ripple effect on your financial wellbeing.

Aim to keep mortgage payments plus utilities to less than 25 to 30 percent of your gross monthly income. Recent regulatory changes limit the debt to income (DTI) ratio on most loans to 43 percent.

3. What is your credit score?

Your credit score is a measure of your credit worthiness. The higher the score, the better you look to potential lenders, while a low score can keep you from qualifying for a low interest rate on your mortgage loan.

If your credit score is low, you may want to delay moving into a new home and take steps to raise your score. Visit our Financial Education Center for tips on improving your credit score.

4. Have you factored in all the costs?

Owning a home comes with financial responsibilities that may be overlooked. Be prepared by creating a hypothetical budget. Find the average cost of utilities in the area you are considering including gas, electricity, water, and cable.

Think through additional costs such as parking, trash pickup, and other basic maintenance costs such as landscaping, snow removal, or replacing air filters every three months. Don’t forget to factor in real estate taxes, mortgage insurance, and possibly a home owner association fee.

5. How long will you stay?

Generally, the longer you plan to live someplace, the more it makes sense to buy. Over time, you can build equity in your home and be able to sell it for a profit when the time comes.

Carefully consider your current life and work situation and think about how long you want to stay in your new home. For example, if you are on a short-term work assignment or plan on moving in a couple of years, buying a home may not make sense financially.


Click here for more information about first time home buying or give us a call at 603.225.2793 and our expert loan officers can help you work through these questions. That’s Merrimack style!

Merrimack County Savings Bank
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Filed Under: First Time Home Buyers Related Link, Home Equity Lines and Loans Related Link, Home Lending Related Link

Recent News

  • Brian Smith Joins the Commercial Lending Team at The MerrimackJanuary 30, 2023

  • The Merrimack’s Annual Mitten Tree Drive Receives Outpour of Community SupportJanuary 23, 2023

  • The Merrimack Donates $10,000 to Support Local Mental Health ServicesJanuary 18, 2023

  • The Merrimack Supports Minority-Owned Businesses in New HampshireJanuary 10, 2023

  • The Merrimack Helps Fund Forest Society North at The Rocks in BethlehemDecember 27, 2022

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PO Box 2826
Concord, NH 03302-2826
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