So you have decided now is the right time to buy a home. Interest rates are still low; home prices are still low but on the rise and inventory is increasing. For many, this is the ideal time to buy. It can be an exciting endeavor but it can also be a stressful and overwhelming time for first time home buyers. Buying a new home is more than attending a few open houses and making an offer and first time home buyers need to do their homework and arm themselves with as much information as possible. By preparing and educating yourself, you can make your first home buying experience much more enjoyable.
As a first time home buyer, the first thing you will need to do is get a good grasp of your financial situation. You will want to get a credit report and find out what your score is and clean up any loose ends that may be holding down your credit score. You will also want to speak to a lender and get prequalified for a loan. This will give you a good idea of just much home you can afford. Next, you will want to assess your monthly budget and expenses and determine how much you can spend on a home each month. You will need to consider more than a mortgage when budgeting. Additional monthly housing expenses include taxes and homeowners insurance. It is generally recommended to spend no more than 30% of your income on housing as you can easily become “house poor.” Once you have determined your budget and how much you want to spend on a home, you will need to determine how much you can afford for a down payment and closing costs. There are also some down payment assistance programs available and many first time home buyers should look into them as an option as well.
Once you have determined your budget and amount you feel comfortable spending, you will want to determine the area in which you want to live as well as the size of home and other home details you are interested in. Would you like a pool? Are you interested in a more “green” home? Do you have a family or plan to grow a family in this home? There are many factors to consider but if you do it ahead of time it will save you a lot of time and effort rather than looking at houses you are not really interested in. Now that you have a well rounded view of the financial side and have determined the type of home you are interested in, your home buying experience will be easier and more enjoyable. Should you have any questions, the best place to start is by contacting an experienced realtor who can help you navigate the home buying process.