Being a homeowner is an exciting time. But before you can buy your first home, there are several things you'll need to do.
First, consider whether homeownership is right for you. Here are some questions to help you decide:
Are you ready to make monthly mortgage payments?
Do you have enough money saved up for a down payment and closing costs?
Can you afford to pay property taxes and homeowner's insurance?
Do you have enough money in emergency savings if something goes wrong with the house?
Are you ready to take on repairs like painting or mowing the lawn?
The first step to getting ready for homeownership is understanding what it means to own a home. Owning a home comes with both financial and personal responsibilities. You’ll need to pay your mortgage, taxes, insurance, and maintenance costs.
It’s important to know exactly how much buying a home will cost you each month before you begin your search for the perfect home. Begin by creating a budget that includes all of your housing-related expenses plus any other major monthly costs such as transportation, groceries, or entertainment. The budget will help you determine how much house you can afford based on your income and other expenses like student loans or credit card debt you may have.
Before starting the home buying process, get pre-approved for a mortgage loan from your lender so that you have an idea of what type of mortgage product will work best for you given your financial situation and goals for homeownership including down payment amount, monthly payment amount, and length of the loan term (30 years vs 15 years). Having a pre-approved mortgage can also help speed up the process once you’ve found one.
If you're thinking about buying a home, the first thing you need to do is get your finances in order.
Here are some tips:
1. Get on track with credit cards and other debts. If you have high credit card balances or other debts, paying them off will make it easier for you to qualify for a mortgage loan. You should also check your credit report for errors, which can reduce your score and make it more difficult for you to qualify for a loan.
2. Save enough money for a down payment and closing costs. A good rule of thumb is to put down 20 percent of the purchase price of the home, but this amount varies depending on where you live and how much money lenders require. You'll also need money for closing costs — fees associated with buying or refinancing a home — which can add up quickly if there are several people involved in the transaction (such as buyers, sellers, and real estate agents). Closing costs typically range from 1 percent to 6 percent of the purchase price, depending on where you live.
3. Consider getting homeowner's insurance before making an offer on a new home — even if it's just temporary while waiting
Of course, the most important aspect of being prepared for homeownership is to find a real estate agent who you can trust. This relationship will set the tone for the whole process, and you'll want to make sure that it's a positive one. For example, if your realtor seems uninterested in helping you or is unable to answer questions about areas you're interested in or seems impatient with your questions, you may want to consider moving on. Trust should be an integral part of every good working relationship, and it will be especially important during such a large transaction.