Very few life events can be as thrilling as buying a home for the first time. If you’re like many others, home ownership is the fulfillment of a dream and marks a major milestone in your life.
In addition to the immeasurable sense of pride and achievement that comes with owning a home, you get plenty of practical benefits, too. For one, unlike renting, you get to build equity with your monthly payments.
Moreover, you are free to do what you want in your home. You can decorate it anyway you prefer, you can now own pets and have your own backyard, and you can generally come and go as you please.
Home ownership, however, comes with bigger challenges than simply paying the monthly mortgage. You need to make sure you’re ready to take on the responsibilities and challenges – and let’s not forget the many joys – of owning your first home.
Make Sure You’re Ready to be a Homeowner
Home ownership can be a greater and longer financial burden. In addition to monthly mortgage payments, you have to spend on regular maintenance, including major ones like kitchen repairs or roof replacements. There’s also the cost of insurance and property taxes to think about.
Before committing to a home purchase, take a long, hard look at your financial situation, both present and future. Will you be able to afford the cost of maintaining a home five or 10 years from now? Is there a way for you to save a little money? Can you still afford the extras you love, such as your gym membership or the annual family vacation?
Look for Financing
Once you know you can commit to home ownership, the next step is to find the right financing.
There are several loan options that are well-suited for first time homebuyers, featuring low or even zero down payments. These include:
- FHA or VA loans
- 1% down payment loans
- 30-year mortgage loans
Before you go home shopping, obtain mortgage pre-approval. While pre-approval is not binding, it will help you determine how much home you can really afford
Improve Your Credit Standing
To qualify for a great loan, you need a good credit score. Get a copy of your credit report and find out how you can improve your credit score.
Your debt-to-income ratio is very important. It has a significant effect on your credit score and is something lenders take a close look at. Remember that:
- Your total debt should not exceed 40% of your income
- Your housing debt should not exceed 32%
What kind of home will 32% of your income buy? That depends on where you want to live.
Work With a Trusted Real Estate Agent
Don’t go through the home buying process on your own, thinking you can save on commission fees. Without a professional to guide you, it’s easy to commit costly mistakes and lose out on excellent opportunities. Keep in mind that you’re making what is probably the largest single purchase in your life. You need to do it right, and the guidance of a real estate expert is crucial to helping you achieve the best possible outcome.
The Sherry and Maria Team can help you in many ways.
- We will work with you in finding the home that best suits your budget, needs, and preferences much faster than if you were to do it alone.Tell us what you want and what you can afford. We'll look a way to satisfy both priorities and find a piece of property you’ll be happy to own.
- We can connect you with trusted lenders and/or mortgage brokers, who can advise you on the type of loan that suits you best.
- We’ll provide you with all the information, resources, and support you throughout the home buying process and make sure your interests are protected from start to finish.