What You Need to Know as First-Time Homebuyers
The home buying process can seem both confusing and overwhelming for first-time homebuyers. It is one of the largest financial decisions that a person will make during their life. If you are interested in purchasing a home for the first time, follow these steps to take some of the stress out of the process.
Establish Your Budget
When you start your home search it is important for you to understand what your realistic budget is for your home. Unless you are going to be paying cash for your house you will want to begin this step by meeting with a mortgage lender. A lender can walk you through the pre-approval process to help you determine what amount of mortgage you can be approved for.
It is important for first-time homebuyers to remember that just because you are approved for a certain dollar amount, it does not mean that you should spend that much. Many experts recommend that you keep your mortgage payment at or below 28% of your monthly income. You also want to remember that there are extra expenses that come with maintaining a home so plan on reserving funds each month for necessary and/or unexpected expenses.
Don’t Wait for Your Perfect House
All homebuyers have an idea or image of what their “dream house” would look like. Everyone has a preference on location, size and neighborhood. If you close your eyes you can probably picture what the exterior style of your “dream house” is.
When you begin your home search it can be easy to allow your “dream house” to cause you to miss out on a great home. In reality, most homebuyers are going to have to compromise on something that they are looking for in their home search.
For example, to live in the big house in the nice neighborhood that you like, you might need to go over your budget. Or, to get the great deal on the house in the neighborhood of your dreams you might need to compromise on the size of the house. Do not let the idea of finding the “perfect” house cause you to miss out on a great house.
Due Your Due Diligence
Once you have found a house that you love it can be tempting to rush to put down an offer, but it is important to make sure that you protect yourself in the process. Doing your due diligence before making it to closing is an important step in making sure that homebuyers do not get stuck in a bad situation.
Home inspection – Make your offer contingent on the house being inspected by a certified home inspector. Having your home inspected prior to closing will save you from being caught off guard by costly home maintenance needs.
Financing – If you are in need of obtaining a mortgage to purchase a house, make sure that you make your offer contingent on financing.
Appraisal – Making your offer contingent on an appraisals allows you to back out of the contract should the house happen to not appraise for the amount that you offered to pay for it. If that situation arises you will be paying money out of your own pocket to make up the difference.
Consult with an accountant at tax time – If you are a homeowner chances are there are tax credits and deductions that you can take advantage of. Make an appointment with a local accountant when you are preparing your taxes to make sure that you are not missing out on any key deductions.
Being first-time homebuyers can be overwhelming. There are many steps in the process of purchasing a home and making sure that you are protecting yourself in the process is key. Follow these steps to help get the most out of your home buying experience and to eliminate some of the stress along the way.