Buying your first home is one of those experiences in life that will have a star on your life calendar for years to come. It’s an exciting moment in your life, but it can also be overwhelming to get there.
Now that more young people are entering their adult years carrying significantly more debt from student loans than earlier generations, many of us are wondering if it’s even possible we will ever buy a home. Especially now that the housing market has gone through such turmoil during the pandemic, with even greater skyrocketing of home prices.
We have encouraging news for you. Buying your first home is still an utter possibility. We’ll share with you how to prepare yourself to be ready to buy.
Start Saving Now
The sooner you start saving toward the purchase of your first home, the better. Most people believe they are only saving for a down payment.
But the truth is that you will face significant other expenses, including closing costs, home inspections, or Realtor fees you may have to cover if they are not negotiated within your asking price.
In addition, you may not have thought about various moving expenses, such as a moving truck rental, storage units, and any furnishings you might need for your new home on or shortly after move-in day.
You’ll want to look over the rest of your budget and see what might be eliminated, such as unnecessary monthly subscriptions or excess spending on dining out.
Several budgeting apps and spreadsheets can be located and used for free online or through your mobile device, as well.
Do Mortgage Research and Get Pre-Approved
A mortgage is simply a loan to help you buy your home. There are several different types of mortgage loans available, however, based upon specific qualifications like credit score and annual income.
Among the various types of mortgages are:
- 15-year fixed-rate mortgage
- 30-year fixed-rate mortgage
- Adjustable-rate mortgage
- VA mortgage
- FHA mortgage
- USDA mortgage
- Jumbo mortgage
- Physician mortgage
And that is just the icing on the cake. Several other types of unique loans may be options for you, such as the HUD’s Good Neighbor Next Door program or Fannie Mae mortgage loan.
Do some research or talk with a broker who will be able to assist you in finding the mortgage that is best for you.
Once you find an appropriate loan, make sure to obtain a pre-approval from your lender. This will be incredibly useful during your initial house-hunting process, because you’ll know what you can realistically afford.
It will also make home sellers more likely to take you seriously, since they’ll see you have the funding to back up your offer.
Choose the Right Real Estate Agent
A real estate agent for home buyers can be your guide through the process. He or she will help you set up showings for homes you may not have found through a Zillow or Realtor.com search.
They are the individuals who will assist with the paperwork and logistical pieces that are required when you close on a new home. As for finding a real estate agent, that requires diligent research as well.
This is your first home and a great agent is a professional who will help you locate the perfect one that fits within your budget, meets your needs, and fulfills your expectations.
Start Your House Hunt
This is by far the most fun part of the process. As you pack up your apartment, you’ll begin to imagine yourself holding the keys to open the front door of your brand-new home.
Before you start the house hunt, study the neighborhoods you’d prefer to live in. Once you’ve established your reasonable budget, what you can afford, and which mortgage you are pre-approved for, this will give you a better idea of what regions you can realistically afford to look for homes in.
Make sure to stick within your budget. In fact, if you can, stay below it. Just because you are pre-approved for a $250,000 mortgage, that doesn’t mean the figure represents the most you can spend on a house.
Remember those closing costs and other expenses you need to include in your savings? It would be smart to leave a little extra wiggle room in your budget.
Most important, as hectic as moving can be, don’t forget to enjoy the process and take your time. Buying a home is a huge investment, and you don’t want to feel rushed about making a decision that must be right for you.