Buying your first home can prove to be both exciting and scary. For many people, it is the most expensive deal they’ll make in life and the process can be long, tricky, and full of unknown terms like down payments, credit scores, mortgage rates, property taxes, and more. There’s plenty at stake with a first home so it’s good to prepare carefully so that you can navigate the real estate market with ease.
Choosing your dream home is a personal choice that is primarily based on your budget, needs, and lifestyle. For this reason, people who have experience in buying real estate will advise you to view multiple properties first before making a final offer on a home you like. If you feel overwhelmed, you can get the help of informational guides like Wahi to keep track of all your house showings and see which properties best match your needs.
Below we offer a guide to help you with everything you need to know about buying your first home and make the entire process more manageable.
Begin Your Research Early
You should start your research as early as you can and read websites, newspapers, and magazines that contain real estate listings.
Take notes of particular homes you are drawn to and see how long they stay on the market. Make sure to note any changes in asking prices as this will help you get a sense of the housing trends in the specific areas.
Determine Your Budget
A house can cost anywhere from a few hundred thousand to tens of millions of dollars, depending on location, condition, and area. A general rule of thumb is that people should look for homes that cost no more than three to five times their annual household income if the buyers plan to make a 20% down payment and have a moderate amount of any other debt.
However, you’re still the one that should determine this based on your financial situation but before you get a loan and participate in the bidding, it is good to think about how much money you can afford to spend on your house purchase.
Be Ready To Commit To A Loan
First-time home buyers are advised to be sure that they’re ready to commit. The average mortgage loan term is 15-30 years and even though you don’t need to stay in that property for that amount of time, purchasing a home is still a huge commitment. You should be sure that you’re prepared for homeownership before taking on a mortgage.
To make things easier, there are certain questions you can ask yourself before making the decision. Are you ready to commit to this home and place for at least 5 years, do you have an emergency fund that could cover a minimum of 3 months of expenses, and do you have a stable income? If the answer to any of these questions is a “no” then you might want to pump the brakes and wait before committing to a house loan.
Maintain Your Credit
When buying a home for the first time, you should not open a new line of credit. When applying for mortgage preapproval, lenders pull your credit report and will do so again before you close on the house and its corresponding mortgage.
If they see that you have taken out another loan or line of credit, and find that your credit balance has increased or that you have started making late payments, it could risk your final approval. The best thing you can do is to make sure that you pay your bills on time and don’t try to influence your credit rating better or worse or start any risky spending. Lenders want to see that your behavior is consistent and that you can be relied upon for future payments.
List Your Needs, Non-Negotiables, and Nice-To-Haves
Once you make up your mind about the type of home you want to buy, you can start prioritizing which features you wish to see in your home based on your needs. For instance, you might want the home to have extra rooms if you plan on growing your family or need a home office. If you have a furry companion, you might want a big yard or have the house be located near a park.
Create a list of qualities and this will help you search for a new home more effectively and with less stress.
Buying a home for the first time can be a smooth process if you explore your options on time and maintain your financial health. This will help you make a smart investment, avoid any costly mistakes and increase your quality of life.