10 Tips to Planning for your First Home
- Author: Jeffrey Simmons
- Posted: 2024-04-18
1. Be Realistic
The goal of home ownership is something that most people hope to realize at some time in their lives. But if you’re looking to expedite the process, you need to be realistic about where you stand. This practical approach allows you to determine the length of time it could take for you to save money. It will also give you time to perfect the steps that will help you realize your dream.
2. Consider Your Finances
The purchase of a property is a major investment and one you need to be sure that you can afford. Before you sign on the dotted line, you want to assess the amount of debt you owe. This includes utilities, loans, credit cards and other expenses. This will also determine the amount of money that you’ll be able to afford for a mortgage. The mortgage interest rate and available loan options are typically dependent on your credit score, so you want to check where you stand well in advance of shopping for mortgages.
3. Save, Save, Save
There is a lot that goes into buying a home, and you’re going to have to come up with money for the down payment. You’ll also have to pay for closing costs and other fees related to the home purchase. Whether you’re getting assistance or not, you want to save, save, save for your new dwelling. Although a savings account is a great place to start, programs where you earn better interest can boost your money.
4. Put Together a Home Checklist
When you’re dreaming about your home, be specific about the characteristics you want most. Although you probably want all the bells and whistles, your features should fit within your budget. A home affordability calculator measures your income to debt ratio. It’s also an excellent guideline for determining how much house you can afford.
5. Prepare the Correct Documentation
The bank or mortgage lender is going to need to see the documentation to back up your financial claims. You can prepare the paperwork by having your W-2s, two years of tax returns, and the most current pay stubs available. They may also require bank statements.
6. Start the Pre-Approval Process
Before you begin to look for a home, you want to meet with a lender. Based on your documents and other financial information, they’ll be able to offer you a pre-approval letter dictating the amount of money you qualify for. If you go to bid on a home, this can help you succeed when multiple offers come in on one property.
7. Find the Right Realtor
Real estate agents have varying personalities and work levels. When in the market for a home, find someone who can meet your needs. They should also be an expert in the area you’re looking.
8. Search Open Houses
Open houses afford you the opportunity to look at homes. Although some may be out of your price range, you’ll get educated on the process of the various features and characteristics of a home and community in which it resides.
9. Understand Your Options
You don’t always need to come up with a sizeable down payment when purchasing a home. There are programs available with varying percentages. Before you commit, research the options available to you.
10. Interview Lenders
You’ll find a variety of mortgage options when securing a loan. There are also going to be differing interest rates and discounts. Before you choose a qualifying loan, interview both lenders and banks to ensure the best deal on your program.
First time home ownership can be a rewarding accomplishment. But before you begin your search, you’ll want to be prepared by utilizing the above ownership tips.