If you are looking to buy your first home, you’re probably excited, but you also may be having a hard time figuring out where to start. Being a homeowner comes with so many perks, yet getting into the perfect home can take some time and work. Looking for some advice to get you started? Here are five steps you can’t afford to skip.
Know What You Can Really Afford
The first step for new home buyers is to figure out finances. If you haven’t looked at your budget lately, take some time to go over it in detail. Map out your annual income, monthly expenses, and any anticipated home-buying costs to really figure out how much you can spend on your mortgage. You’ll also want to take the current average APR and different loan types into consideration. As a good rule of thumb, your monthly housing payment should not exceed 28 percent of your monthly income, so find an amount that fits this range and stick to it when shopping for houses.
Start Saving as Soon as Possible
The costs of buying a home can really start to add up, so start putting money away early to avoid any financial surprises. Use a down-payment calculator to figure out what you’ll need up front, and then factor in other costs as well. You’ll need to think about costs related to closing, moving, repair, inspections, and any items that may come up along the way. Bulking up your savings account can really spare you the stress of unexpected financial roadbumps.
Check Out Your Credit Report
If you haven’t taken a look at your credit report lately, now is the time to review it. You can request a free copy of your credit report once every 12 months, and it’s important to get reports from all three major credit agencies: Equifax, TransUnion, and Experian. Take care in reviewing your reports and check for any outdated or incorrect information. While you’re taking care of your credit file, it’s also a good idea to hold off on applying for any new accounts, as this can lower your score and have an impact on your ability to secure a home loan.
Think About the Future
Getting out and looking for homes can be an exciting, but it’s important to stay smart and focused. Don’t just pick a home that suits you now, but one that you can really see yourself living in for years to come. If you find a home you adore, take a step back and look at the neighborhood and surrounding areas. Things like schools, parks, and access to restaurants may not seem like a big deal to you now but may become important to you as the years go by and your life changes. Buying a home is huge commitment, so make sure you’re completely comfortable with everything a property has to offer.
Prepare to Compromise
You may not want to hear this, but it’s rare to find an absolute perfect home. Focus on finding a home that fits your lifestyle but don’t expect a property to fill all your expectations. The right home for you may be one that needs a little work or could be in different part of town than you expected. You may find that perfect home only to have it go to a different buyer or fail important inspection items. Go into the home search with excitement but try to be reasonable with your expectations. A willingness to compromise could be the most important tool in your new venture.
Becoming a new homeowner is a wonderful accomplishment, so be proud of achieving this milestone and get excited for all of the possibilities! Planning and patience are essential for making this step a successful one, so use the tips above to help you on your journey to becoming a homeowner.
Article provided by:
Jim McKinley
jim@moneywithjim.org
Moneywithjim.org
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