Buying a new home is exciting, especially if it is your first time. However, it can also overwhelm you, what with all the different types of homes available for sale in the market. Do you know that buying new homes can actually do you more harm than good? Indeed, it can be tempting to purchase a house impulsively, especially if its price is within your budget. You need to know certain things to protect your financial status and achieve your money goals. Below are some valuable suggestions on how you can buy your first home without going through so much trouble.
Establish a Budget
Homes can come in different types, sizes, and prices. Set a budget for the purchase you want to make, know your preferences in a real estate investment, what amenities you want to be included in the package, and so on. Setting a budget before making the purchase can help you prepare for the entire process’s financial aspect and get you ready for other hidden charges, including taxes, closing costs, insurance, renovations if required, cleaning costs, and many more.
Pay Outstanding Debts
It will be easier for you to buy a new home if you are debt-free. Some lenders factor in your credit score and credit-to-income ratio before approving your application for a loan. If you have too many debts or have huge outstanding balances, this may affect your credit score and your chances of getting approved for loans. Additionally, being debt-free allows you to focus more on your mortgage and other important expenditures.
Save for Your Down Payment
If the price of a house is too big to get within the range of your savings, at least spare some cash for the down payment. Usually, down payments are 20% of a home’s total price. The balance can be paid off through loans from lenders.
Prepare for Closing Costs
Apart from the down payment, you should also be ready to shell out an amount for closing costs. Closing costs cover the following fees for the home’s appraisal, a real estate lawyer’s services, home inspection, credit report, and homeowner’s insurance. They are usually 3-4% of a home’s total price.
Apply for a Loan
Once you are certain that you have saved enough for the down payment and closing costs of a home, you can then apply and get pre-approved for a mortgage loan. Lenders usually cover 80% of a home’s total cost. Getting pre-approved may take some time since the lender may need to check your financial background first to verify your loan eligibility. During this process, you may be asked to submit your proof of income, tax information, and many more. They may also check your credit standing.
Familiarize Yourself with the Neighborhood and Location of the Home
Do not immediately decide on a home based on its price range and amenities. Consider as well its location and the quality of its neighborhood. Know the crime rate of the neighborhood it belongs to. Research if it is near your area of work, schools, supermarkets, shopping districts, and all other conveniences that may matter to you. You may also want to check the traffic condition, the noise levels, and if you will be comfortable staying there for the rest of your life. Choose only a home where you are certain that you and your family will be safe and where you will feel good about spending the rest of your life.
You can also hire a real estate agent to help you with the home-buying process. These professionals know every detail of a property, and they can likely help you get just the right home for you if you work closely with them. They can give you advice on mortgage loans and can direct you to houses for sale that will best suit your needs. They can also provide important details that can help you decide whether you should get on with the purchase. A real estate agent can even give you a heads up on certain issues that you should look out for before spending your hard-earned money, such as roofing problems, insect issues, leaks, and any other issues surrounding a home.
Your agent can also help you get pertinent data regarding a home’s history, neighborhood demographics, proximity to schools and other crucial establishments, crime rates, and other pertinent information that you should know. The knowledge and experience of these professionals can help you save thousands in the long run and may even spare you from the taxing process of researching about the home you are interested in.