7 Tips For Buying Your First Home
Purchasing a home is a big financial commitment – potentially one of the biggest purchases you’ll make in your lifetime. When buying your first home, it is easy to get overwhelmed or feel like the financial decisions are out of your control. While home hunting can be exciting, the process of buying a home can be somewhat challenging. Regardless, buying a home is actually quite simple. Buying your first home is a process that you have to go through step by step. You just have to educate yourself on the basics, so that you can keep the professionals that will help you along the way in order. With some planning, you can be ready to commit to a home with confidence. Here are some tips to help in buying your first home:
1. Set Your Budget
This sounds like the simplest tip but is far from it. Perhaps the longest preparation you need to make is setting your budget and everything about it. Most people don’t maintain a personal budget or balance sheet, leaving them with little clue of how much they can actually afford. It’s not just about setting it up for the down payment. It’s also staying in a stable job for several years, taking care of your credit accounts, keeping your debts down, paying your bills on time, monitoring your credit history, and more. If you are one of these people, sit and write down all your personal expenses and incomes. As you seriously plan to invest in a house, you also realize that it’s time to have a lifestyle change in order to really afford to buy and keep it.
2. Determine Your Down Payment and Monthly Housing Cost
In most cases, you’ll need a minimum down payment of 10-15 percent. However, it can be advantageous to make a larger payment to reduce the interest you’ll pay and avoid fees attached to low-down-payment loans. As a benchmark, your down payment generally needs to be at least 20 percent to avoid Private Mortgage Insurance (PMI). You can determine your monthly housing cost by adding the cost of your mortgage payment, taxes, and homeowners insurance. Be sure to look at the total monthly housing cost before purchasing a home to make sure it fits into your overall budget. Calculate your monthly mortgage payment here.
3. Know What You Want
When finding your ideal home, you need to think about what your ideal price range, size, layout, and building materials are, in order to narrow down your search. There are times when, even knowing all of these particulars, it is still very hard to decide. One of the things that can make purchasing a home such a hard task is that sellers will bombard you with so many houses to look at that you can’t even begin to take them all in. There are a few steps you can take when you decide that it’s time to buy a home. Write down exactly what you want and what you need before you start your search. Having a set list of requirements will make it simple to shortlist properties. This is a great way to stop yourself from visiting half a dozen open homes a week and never being able to make a decision.
4. Don’t Choose Too Quickly
Property is always a serious investment. Don’t just jump on the first house you see. Keep in touch with the owners, be prepared to put down an offer but keep looking because you might just find something better. It’s easy to fall in love with a house that seems to fit your needs but it’s always better to explore your options and get a little experience first before you dive right in.
5. Have a Home Inspection
Never buy a home without getting it inspected. Most of the time, with the except when it is owned by the bank; you can get the current owner to either fix a problem or negotiate the price of fixing it right into your offer. This makes having a home inspection crucial. This is a must for any buyer. Make sure you hire a professional, not just anybody. If you find a major problem, you will be glad to have spent a few hundred dollars up front versus having thousands of dollars of cost down the road. There are no licensing laws for home inspectors in some states, so make sure to ask if your inspector is FHA certified and what other qualifications they have.
6. Hire a Real Estate Agent
You need to find a real estate agent whose services are matched to your needs. Most people skip this step and try to do things their own way. If you’re not familiar with the home buying process, this isn’t exactly something you should skip on. Before an agent ever shows his client’s prospective houses, he does copious research on his own to make sure that the houses are suitable. An agent can help you work the system, get you through the paperwork, and get you in touch with other professionals needed in the home buying process.
7. Make an Offer
When your agent has taken you through the process of selecting houses to look at and you’re confident you’ve found the house you want, the next step is to make an offer. When you think that your credit score is sufficient, you’ve verified that all information is correct in your credit report, and you’ve saved up enough money for the down payment and closing costs, it’s time to purchase your first home. There are various types of houses so make sure that you take a close look at each one and that what you pick is right for your financial situation. Secure a preapproval letter from the seller in order to have an edge when negotiating for the house that you want to buy.
Once your offer is accepted the closing process will begin. This is the most exciting aspect of buying your first home. You know that soon you’ll have the keys in your hand and you can begin turning the house into your home. After you’re done with the closing, you can then move on to occupancy or turning over of the house.