How to Prepare to Buy Your First Home
Purchasing your first home can be exciting as well as somewhat intimidating. By employing a few simple approaches to the task, you will greatly enhance your chances of taking some of the anxiety out of the process and be able to secure a home that will prove to be a source of pride and pleasure. Read on to learn how to prepare to buy your first home.
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Things You'll Need
- Financing
- Household budget
- Credit report
- Paper and pencil
- Map of the city
- Realtor
Instructions
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Define your current financial status. This will involve identifying your current monthly net income, your current monthly expenses and any resources you may have in savings. Once you understand where you are financially right this minute, you will be in a position to explore your options for managing a major purchase, such as a first home.
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Obtain a copy of your credit report. While you may currently be doing very well with managing your net income to pay bills, there is always a chance that some old item or even a mistake is currently showing up on your credit report. By checking before you begin to look into financing options, you can identify issues that need updating or correcting. Go for a report that includes data from the three main credit reporting agencies, as you never know who a potential lender chooses to consult when assessing your credit worthiness.
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Decide how much you can reasonably afford for a monthly house payment. If you currently rent, your monthly rental is a good place to begin. But keep in mind that you will also have to consider annual property taxes, home owners insurance and other expenses that are commonplace for homeowners.
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Look into financing options. Start with your current bank and determine how much they would be willing to finance when it comes to a new home. You may also be able to establish a line of credit that you can draw against as a means of financing the home. Just make sure the payment terms and conditions will work with your budget.
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Identify what you want in a first home. This will include size and number of rooms, amenities such as an enclosed garage, general design, size of the lot and any other factor that strikes you as important. Also include any locations around town that would be ideal in terms of neighborhood, access to shopping, schools and houses of worship. Knowing what you want creates a basis for deciding whether or not to look at a given house. Write down all your wants on a notepad and keep it with you at all times.
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Engage the services of a Realtor. Since you have established your credit status, know how much financing you can obtain, and what type of monthly payment you can reasonably afford, you provide the Realtor with the basics required to match you with possible first homes.
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Check out several potential homes before making a decision. Be prepared to look at many different homes over an extended period of time. Even if you find one that you really like early on in the process, ask to see a few more. Something may come along that is even better and be available at a lower cost.
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Tips & Warnings
Just because you can command a certain line of credit does not mean you have to spend the entire amount. The focus should be on obtaining a home that will be inviting, comfortable and meet most if not all of your needs. If that can be accomplished by committing to less than the total of your line of credit, that is all the better, as it allows you a backup resource if you need to make major repairs during the repayment of your mortgage.
There is every chance that you will not be able to get everything you want in a first home, especially if your credit is not the best. Prioritize your wants and try to get as much as you can and still stay within your means, even if others urge you to do otherwise. The stress of the additional financial burden will kill any enjoyment you would obtain from being a home owner.
