Buying a home is a huge decision and one that can be stressful for many people. One of the biggest sources of stress for some first-time home buyers is not knowing what to expect.
While buying a home can be a complicated process, becoming familiar with some of the steps and learning why they are necessary can make it easier. Use these tips to help you get started being as prepared as possible.
Managing Money Wisely
Money is one of the biggest parts of purchasing a home, and being financially prepared is imperative. Here are some areas to cover before beginning your search:
- Save up for Your Down Payment: Twenty percent of the purchase price is often required for a down payment. If you don’t have that amount saved for a down payment, however, your lender may be able to offer other strategies. Keep in mind that the more you put down, the less the home will cost you in the long run in most cases.
- Get Your Credit In Shape: In general, the higher your credit score, the lower the interest rate you will qualify for when applying for a mortgage. This then impacts the amount of your monthly payment as well as the total amount to be paid out over the life of the loan. One of the most effective ways to get yourself in shape financially is to improve your credit score.
- Prepare a Realistic Budget: When figuring out how much house you can afford, be sure to take into account all potential expenses. These will include not only fixed monthly expenses, but costs that fluctuate, such as groceries and entertainment. Be sure to factor in other estimated costs of homeownership which might include things like yard maintenance. Preparing a detailed projected budget will help you determine what you can afford for a total monthly house payment.
- Set Up an Emergency Fund: Regardless of how much you plan to spend for your home, be sure to set aside some extra cash for unplanned expenses. No matter how thorough the home inspection, for example, it’s always possible you’ll need to make unexpected repairs.
The Finer Details
You may be very eager to get into your new home but before signing anything, there are some other important matters to cover.
- Consider Future Needs: Instead of purchasing a home that is perfect only for your current needs, also think about what you may need in the future. For instance, is it possible that additional people will be living in the home? If so, is the space adequate? Will the layout be conducive to meeting everyone’s needs? How appropriate is the location?
- Don’t be Afraid to Make the Offer: At the same time, just because you don’t see yourself living there in 5 years, for example, that doesn’t always mean you should forego a great purchase opportunity. Consult your real estate professional for assistance in choosing a home wisely, based on your own personal situation as well as the future of the area you are considering, whether you plan to be in the home for a few years or for a lifetime.
- Make a Checklist: When visiting a number of different homes, it can be easy to overlook key details. Before starting a serious search, create a list of “must haves” that will help you narrow the search while at the same time focus on the most important aspects of your new home.
Buying a home is a huge step. However, becoming more familiar with the process, preparing yourself financially, and spending time outlining your current and future housing priorities will go a long way to helping you find the perfect home.