Buying a home is a big undertaking and it can feel especially intimidating if it’s your first time. While it can be a bit nerve-wracking trying to understand what to do and what not to do, these tips can help you better navigate the process so that you can feel confident with your decisions along the way.
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Create a Budget and Start Saving
Creating a budget early on that allows you to set aside a certain amount each month for your future purchase is necessary. It takes many people years of saving and discipline to be able to afford to buy a home of their own.
Buying a home is expensive, with the costs going well beyond the listing price. Not only do you need to save for your down payment, but you also need to factor in closing costs, which cover home inspections and lender fees, totaling as much as 5 percent of your loan. You should also budget for moving costs, last-minute expenses, and potential emergencies.
Know What You Can Afford
The most important factor in buying a new home is knowing how much you can truly afford. Although you can purchase a home with as little as 3 percent down, many financial experts recommend a down payment of no less than 20 percent. While that can be tough for most people, it’s essential to follow the rule that states your monthly mortgage, including taxes and insurance, should not exceed 28% of your regular take-home pay.
When determining how much home you can afford, use a house payment calculator and speak openly to your realtor about your budget. Be sure to tell the agent what your max budget is, and don’t look at any homes over that. You don’t want to be tempted to spend more than you should and end up in financial trouble.
Interview Professionals
Having the right people to work with when buying a home is crucial to a successful and smooth purchase. Research and interview different lenders, check their rates and ask about first-time buyer assistant programs.
It’s also important to ask friends, family members, co-workers, and neighbors for referrals and then interview multiple realtors to be sure you find the best fit. Sellers typically pay the commission fees, so there’s no reason to go into it without an experienced real estate agent who knows the local market well.
Get Familiar with the Neighborhood
A common piece of advice is to buy the worst house in the best neighborhood. You can remodel a home, but you can’t move it to a better neighborhood. Renovating a fixer-upper will also quickly increase your home’s value.
Being familiar with the neighborhood also means you’ve checked out the schools, crime rates, and ideally, have spoken to at least one person who lives in the neighborhood. The neighborhood you’re looking to purchase in may also have a Homeowners Association and monthly HOA fees. It’s wise to review their rules and regulations to be sure you can abide by them.
The Bottom Line
Take the time to learn about each step in the buying process and be patient. Saving, researching, and touring houses as you look for the right home all require a lot of patience. While buying your first home may feel challenging at times, it’s also very rewarding when you finally get those keys.
