Despite what you may have heard, buying your first home is a very exciting time. As with all things though, careful planning and preparation are key to making sure this big transaction goes off without a hitch. If you are thinking of buying your first home, or are already in the process, it is never to early to start planning and preparing. By following some of the tips below, you will be well on your way to owning your first home.
Figure out how much you can afford to borrow. This day in age there are so many resources available online that the process of calculating how much you can actually afford to borrow is a relatively pain free task. There are a number of important factors that are important to consider aside from just the monthly principal and interest payment. In addition, you must consider property taxes, homeowners insurance, as well as an emergency fund for repairs and maintenance. Creating a budget before buying your home is a good way to think of all the expenses you may incur in buying and owning your own home.
Track mortgage rates. Perhaps the all time most important thing to consider is what kind of mortgage rate you are eligible for. Having a good understanding of the economy as well as your own personal financial position will help eliminate any surprises when it comes to securing a mortgage. Having a good understanding of the economy will also allow you to time the market and hopefully either lock in a good rate or wait for lower rates in the near future.
Choose a lender or mortgage broker. Shopping around for a well-known, reputable loan officer will pay you back in more ways than monetarily. An experienced lender will help you not only secure a solid mortgage but will hopefully know of incentives or other ways to save you money in the home buying process. Just because a mortgage broker offers a low rate does not mean that they are reputable. Not only that but you will most likely be in contact with this person frequently so you want to make sure that you are able to communicate well together and have an overall good relationship.
Save up a down payment. Although the contingencies on down payments have lessened in recent years, this is something that you will definitely need when buying your first home. Depending on your particular situation you most likely will want to put down at least 20 percent of the purchase price. This not only allows you to pass on paying mortgage insurance, but you will also be able to take advantage of lower interest rates.
Gather your documents. Perhaps the most tedious part of buying a new home is ensuring that you have all of the necessary paperwork in order to secure a mortgage. Starting to track down this information as soon as possible will help to ensure that there are no snags in the process later on.
Hopefully with these tools you will be well on your way to owning your first home. The most important thing to remember is that this is an exciting milestone in life and to enjoy every moment of it.
When I bought my first house, it was during the housing boom, but not quite at the top. 🙂 Things went so quickly that you needed to do a pre-inspection, waive all types of normal protections, and offer significantly over asking price. You needed everything done before you even went to visit because there was an open house and offers were being considered 2 days later.