Buying a home is perhaps one of the most expensive investment decisions you’ll make in your lifetime. You can’t afford to make a mistake, especially when thousands of dollars are on the line. Knowing what things to consider before you make any move will help lessen the anxiety that comes with purchasing your first home, mitigate expensive errors, and help you undertake the whole process with more confidence and less stress.
This article lists helpful tips straight from experts and experienced home buyers that will help you prepare right and move through your first-time home-buying process in a breeze.
Table of Contents
- Consider the Location First
- Don’t Buy a Home You Can’t Afford
- Learn How the Market Works—and Use It to Your Advantage
- Calculate Your Monthly Home Expenses, Mortgage, and All
Consider the Location First
Your home’s location is tied up to a lot of other important considerations, mainly the price, its proximity to your place of work, the safety of the neighborhood, the closeness of schools (if you have kids), and other essential amenities like the hospital or the grocery store. This will narrow down your search.
Don’t Buy a Home You Can’t Afford
Just because you got preapproved for a $500,000 home, it does not mean you should go ahead and buy it. Be realistic as to what you can afford and how much you will be willing to pay for the cost of a mortgage every month. Identify a range of affordability, and save yourself the headache.
Learn How the Market Works—and Use It to Your Advantage
Do your research. Learn the jargon. Know what types of loans you can potentially qualify for, and ask questions when necessary. Read whatever you can about the home-buying process, and get no-BS advice and insights from web forums. By learning how the market works, you’ll be more equipped to find your way through.
Calculate Your Monthly Home Expenses, Mortgage, and All
Online calculators for monthly mortgage payment are not accurate. Depending on the type of loan you will qualify for, there’s a possibility that you still need to factor in your mortgage insurance payments. Then you also need to consider utility payments, the cost of home maintenance, and necessary repairs and improvements like investing in energy-efficient bathroom fixtures, adding a fireplace, or installing a granite counter, on top of your regular household expenses.
Don’t Forget about Your Move-In Costs
Speaking of expenses, you also need to include your move-in cost into your budget. These expenses include packing materials and equipment, logistics, cleaning, utilities, food, storage, and labor, among others. Per the American Moving and Storage Association, moving in costs an average of $2,300 for four movers with a rate of $200/hour.
Do Everything You Need to Do Before Talking to a Lender
Your credit score is an important factor that will determine how much you’d qualify for a mortgage. Before you apply for any, see to it that your spending is in check and your score is healthy. Be wary of lenders making hard inquiries on your SS account as it can damage your score.
Work with Realtors Who Have Your Interest in Mind
It’s important that you work with people who have your best interest, can answer questions you have about the process without bias, and give you options instead of hurrying you to a sale. Communicate your needs properly, and let them know about your goals as a buyer.
Have a Plan for the Long Term
Assess your long-term goals in terms of career and family needs. Will this be your forever home, or will you sell after five years? These are crucial things to consider not only in choosing the type of house and the perfect location but also in determining the type of mortgage you should apply for.
Save for a Down Payment
The amount of money you put for the down payment of the loan would determine the interest and your monthly payments. A 20 percent down payment is ideal as that would eliminate the need to pay for private insurance, although there are financing options that don’t require this amount.
Stick to Your Budget
It’s worth reiterating that it’s okay (and possibly more recommended) to ignore the number in your loan preapproval. Instead, take it as the cap amount. Remember that your mortgage payments are only part of what you spend money on every month. Stick to your budget and stick to your needs. It’s better to have extra money saved every month than not have any wiggle room for unexpected expenses.
Indeed, proper knowledge can be a soothing remedy to the daunting feeling of buying a home. By knowing which initial steps to take and what to look for before you head out looking for a house or a lender, you’ll be more equipped to make smart decisions that will favor your finances now and in the future.