Home Buying Basics from PNC
For most of us, buying a first home is a dream come true. However, it can also be a lengthy process where potential — and sometimes very costly — pitfalls trap the unprepared buyer. This guide will help prepare you as you begin the home buying process.
First Time
Home Buyer's Guide
Buying your first home can seem complicated. That’s why our guide helps you understand every step of the process, from budgeting to closing on your first mortgage.
Owning a Home
Homeownership means more responsibilities, but also
potential benefits for your family and your finances.
Your home may appreciate in value.
You can build equity to use for home improvement loans, education and other expenses
Your home is your own – you can do what you like with it to reflect your lifestyle.
You may save money at tax time by deducting mortgage interest and property taxes.*
Benefits & Costs of Home Ownership
Let's break down the costs and benefits of owning a home.
Costs of Home Ownership
- Monthly mortgage payment
- Your down payment – as low as 3% of the sale price
- Closing costs – typically 3% to 5% of the loan
- Taxes & insurance
- Utilities
- Repairs & maintenance
- Homeowner association dues or assessments
While these costs will vary from home to home, you’ll want to know what they are before making a final purchase offer.
Benefits of Home Ownership
- A home offers a stable place to start or grow a family, stronger ties to a community, along with greater privacy
- Your home is your own, and with that comes the ability to make changes as desired to reflect your personal lifestyle
- You can increase your net worth by building equity through:
1) monthly principal reduction payments
2) your home potentially increasing in value over time
You may be able to deduct your interest and property tax (consult a tax advisor to further discuss)
How much home can you afford?
Before you purchase your first home, there are important things to do and know.
Know how much you can afford
Depending on the amount you have saved for a down payment, your mortgage payment should typically be no more than 28% of your monthly income, and your total debt should be no more than 36%, although debt ratios have some flexibility, depending on the mortgage type you choose.
You can calculate your monthly housing budget by taking your total income, then subtracting:
- Fixed expenses (car payment)
- Variable expenses (credit cards or utilities)
- Monthly savings
The result is the money you could have available to budget for housing.
Maximize Your Credit Score
Generally, a better credit score will help you get a better interest rate on your mortgage. And even a small improvement in your score can have an impact on your monthly payment and potentially save you thousands of dollars over the course of your loan.
Save for Extra Costs
Lastly, you’ll need to have some money tucked away for extra costs beyond your monthly mortgage payment. These costs include your down payment and closing costs.
PMI is a special insurance policy that allows borrowers the flexibility to make down payments smaller than 20%. It protects your lender in case of default on the payments. If your mortgage requires PMI, PNC gives you the option to pay the PMI premium in a single lump sum at closing or as part of your monthly mortgage payment.
- A down payment of 20% or more helps you avoid PMI (Private Mortgage Insurance) and lowers your monthly payment.
- Closing costs are typically 3% - 5% of the total home cost.
Calculate Your Mortgage Payments
Get an estimate on monthly mortgage payments.
Calculator: Calculate Your Mortgage Payments
Consider Mortgage Options
PNC provides a variety of mortgage options to fit your unique situation.
- Fixed-Rate Mortgage: interest rate never changes
- Adjustable-Rate Mortgage (ARM)[1] : lower starting rate that may increase or decrease over time » PNC ARMs have rate adjustment caps
- FHA Loans for expanded eligibility and low down payments
- Veterans Affairs Mortgages for U.S. military service members
- Affordable lending products that offer low down payment options
- PNC Community Mortgage
- Government Loan Options (FHA and VA)
- PNC Homeownership Grant
See the differences between a fixed-rate mortgage and an adjustable rate mortgage
Calculator: Fixed Rate vs. Adjustable Rate
Finding the Right Home
Making a House Your Home
Use our House Hunters Checklist to help with your home search.
It’s important to find a real estate agent who will:
- Help provide background information on properties of interest to you
- Guide you through the buying process
- Make it easier to work with the seller
You might also consider hiring a real estate attorney to:
- Be your advocate during negotiations with the seller
- Review contracts and research liens and encumbrances
- Make sure there are no legal surprises ahead
Ready to Get Started?
Closing the Sale
Closing the Sale
Closing the Sale
At last – you’re ready to finalize the sale.
During the closing, you’ll meet with all parties involved in the sale to make it official by signing documents, receiving the deed and paying your closing costs, which may include:
- Attorney, broker, credit report and/or lender fees
- Title search and insurance
- Appraisal and inspection fees
- Points – a predetermined fee similar to prepaid interest
- Paid to the lender to receive a particular interest rate
- 1 point equals 1% of the loan amount
- Other costs depending on your particular loan
Property insurance: Also called homeowner's insurance, property insurance protects the homeowner from losses to the property, as well as potential liability from events that occur on the property and elsewhere. Lenders require homeowner's insurance coverage to protect the collateral that secures their loan. Some homeowner's insurance policies do not cover catastrophic events such as tornadoes, hurricanes or floods. These kinds of events generally require a separate insurance policy. Sometimes additional insurance may be required for your loan.
Property Taxes and Homeowner's Insurance: A typical monthly mortgage payment consists of amounts for loan principal, interest, taxes and homeowner's insurance. Taxes and insurance are usually paid from an escrow, or impound, account.
Take the Next Steps
Check rates & calculate your savings, learn more or get started
Set Your Budget.
Search for Homes
Find the home that fits you and your budget. Determine a mortgage payment that you can afford, based on your actual budget and lifestyle. Or start shopping for homes with real‐time rates and loan products.
Get Product Details
Read about the different mortgage products to better understand which type of mortgage fits your unique situation.
Get Started Today
Whether you are just starting your search or have a home in mind, PNC can help you get started.
Important Legal Disclosures and Information
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For Adjustable Rate Mortgages loans ("ARMs"), rates may increase after settlement.
Preapproval is not a commitment to lend, a condition of loan approval or an application for credit.
*Consult a tax advisor regarding the deductibility of interest
PNC, PNC HomeHQ, PNC Home Insight and Home Insight are registered service marks of The PNC Financial Services Group, Inc. ("PNC"). PNC has a pending patent application directed at various features and functions of Home Insight® and Home Insight® Planner. All loans are provided by PNC Bank, National Association, a subsidiary of PNC, and are subject to credit approval and property appraisal.
©2023 The PNC Financial Services Group, Inc. All rights reserved.
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