How to Prepare When You Are Looking to Buy Your First Home

What if you could own a home without all the stress that comes from buying?

Many people who are looking to buy a house hesitate because it is so intimidating. However, a few simple preparation tips can help make the whole process easy and smooth.

Wondering how to prepare for buying your first home? Keep reading to discover our guide!

The “Just Right” Price

Looking for your own home can make you feel a bit like Goldilocks inspecting beds and meals. It may take a bit of time, but you want to find what’s “just right” for you.

This applies to the overall price of the home. Finding the best home can be difficult for a first time home buyer, and it’s easy to bite off more house than you can chew.

For example, you generally don’t want a mortgage payment that will be more than 30% of your monthly income. At that point, even the very best home is dragging your budget down and keeping you from doing everything else you want to do.

Shop for Rates

It’s easy to think of buying a home as something very confusing and complex. However, in some respects, it’s not that different from buying a car.

When you buy a car, you don’t just buy one from the first dealer that you find. Instead, you shop around and try to find the best possible rates for your purchase.

That same logic applies to buying a home. You can afford to contact multiple banks and financial institutions in order to get a good rate.

Keep in mind that you’ll be making home payments for 15 to 30 years. Taking the time to get a better interest rate now means saving thousands of dollars over the years!

Handle That Debt

Speaking of “thousands of dollars,” here’s some blunt truth: you need to pay down your other debts before buying a home.

It’s an open secret that buying a home is more expensive than renting a home. Your mortgage will be higher than the rent, and you’ll be responsible for paying for anything that breaks.

All of this cuts into your monthly budget. And when extra payments combine with things like loan and credit payments, you may not have much money left.

You can rig the whole thing in your favor by paying down debt first. You’ll then have much more money available to use throughout the year!

Future Forecast

A rookie mistake that first-time buyers make is “only” inspecting the home. However, it’s equally important to inspect the area and ask yourself this question: “do I want to spend the rest of my life here?”

It’s true that you could sell this home and buy another if you really wanted to. But even if you end up doing that, you’ll probably be in that first home you buy for upwards of 10 years.

If you have children, it’s important to figure out if you are near good schools. If you hope to one day work somewhere else, it’s important to figure out the commute.

In short, you need to treat this like what it is: a long-term purchase!

Juice That Credit

There are many complex factors that control what interest rate you get for a mortgage. And one of the most important factors is your credit.

If you haven’t done so already, you need to sign up for free monthly credit monitoring. These reports give you not only your credit score but information about how and why you received this score.

You can then use that info to raise your score. Are you getting dinged for a high debt-to-income ratio? In that case, paying the debt down will naturally lift your score.

These reports can also let you see if you are being affected by fraudulent activity. If so, a single call to a credit card company can dramatically improve your score.

Solid Down Payment

First-time homebuyers often have the same question: “is it important to make a big down payment?” The answer to this question is “yes and no.”

For instance, you don’t have to put 20% down to buy a home. Numerous loan programs (including FHA and VA loans) allow you to buy a home without putting any money down.

However, there is sometimes a “catch.” With some loans, you will be stuck paying Private Mortgage Insurance if you put down less than 20%. And with FHA loans, you’re stuck with FHA mortgage insurance.

All of this makes your monthly mortgage payment add up. You may find owning a home more affordable if you take some extra time now to put away more money for a down payment.

Realtor Team-Up

What’s the main difference between a painless home buying experience and a painful one? Simple: a good realtor!

Just as you want to shop around for a good interest rate, you want to shop around for a good realtor. You can even find someone who specializes in helping first-time homebuyers get their dream house.

The realtor helps make your mountain of paperwork much easier to understand and complete. And a good local realtor can also make recommendations for things like inspectors.

And because the realtor understands the local market, they can make recommendations for negotiating on the price of a home.

Fine-Toothed Inspection

Speaking of inspections: you are the first line on this front.

As part of your purchase, you will likely need to hire an inspector. And they will look for many things, including major problems such as termites.

However, the first inspection starts when you tour the home. Take the time to turn on all the lights, try all the faucets, flush all the toilets, and so on.

This can be a big time-saver. If there is a lot wrong with the home, then you’re better off just finding another one!

Looking to Buy: The Bottom Line

Now you know what to look for when you’re looking to buy. But do you know how to live like your favorite celebrities?

We help shine a spotlight on the financial lives of the most famous celebrities in the world. As you kick back in your new home, come check out our analysis of your favorite TV celebs!

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