Buying your first home is a journey. And as with any adventure, it all begins with that ever-important first step. Let’s take a look at a few of the things you’ll need to tackle before buying a house – in some cases, years before.
Begin Your Homework
You will find many books and websites on the topic of buying your first home. The information can be overwhelming – you may wonder how you will get it all straight. But with patience and time it will all begin to make sense. Keep reading, researching, and asking questions.
Save for a Downpayment
As a first-time home buyer, the sooner you begin to save for a downpayment, the better. Programs do indeed exist to help you get into a home with a low downpayment, but remember, the less you put down, the more you will pay each month. If you are used to a low rent payment, or no rent at all, a high mortgage payment can not only risk your financial stability but put a crimp in your lifestyle. Priority one is to get your finances in order and start saving for that downpayment.
Work with a Financial Professional
If you are trying to convince yourself that you can afford a larger mortgage than you actually can, consider bringing in a financial expert. She will look at your monthly income and liabilities to make an impartial, unemotional assesment of what you should spend on a house. Your mortgage lender will have his own formula for qualifying you as a home buyer. He may give you the green light to borrow more than you had anticipated. But be careful here, avoid overextending yourself at all costs.
Here’s something else to consider. Even though you may end up with a comfortable mortgage payment, property taxes can rise significantly for various reasons – such as the construction of a new school. Leave breathing room for such circumstances.
Know Your Credit Score
Your history of paying bills is paramount when it comes to qualifying for a home mortgage with a good interest rate. If you were often delinquent on car payments, credit card bills or other debt, you may be forced to accept a higher interest rate or turned down all together.
Get your credit report for free at Annual Credit Report.com. This is a government-regulated service. If your credit score is low, work hard to raise it to an acceptable level before applying for a mortgage.
Buying a home for the first time can indeed be daunting. But by doing your homework, building a solid down payment, knowing what you can pay each month and establishing good credit, you’ll be well on your way toward the gratification of home ownership.