Buying a home is a major decision in someone’s life, but especially when you are a first-time homebuyer!
Whether you are looking to become a homeowner to move away from renting, create an investment property, or for other reasons, there are a lot of different steps that you must keep in mind if it is your first-time purchasing property.
While the process of buying your first home may seem daunting, doing your research and homework ahead of time will help to make the process as stress-free as it can be.
Check out some tips for first-time homebuyers on how you should prepare for this huge milestone:
1 – Look at your debt.
First, look at the debt that you currently have, which will help you to assess what is feasible to pay each month in terms of your mortgage as a first-time homebuyer. For debts, look at any outstanding credit card debt that you have, student loans that you may still be working to pay off, or any other loans such as your monthly car payment. Your debt is something that lenders will check out ahead of approving you for a mortgage, so it is best to get a handle on it as early as possible and come up with a plan on how you can work to pay it off faster.
2 – Start saving as early as possible.
As you are assessing your current debt, begin consciously saving as much money as you possibly can. There are a lot of costs associated with purchasing a home, some more obvious than others. For example, you will need to make sure that you have a solid down payment for the home, which can help you immensely in terms of the loan that you take out for your mortgage. In addition, there will be closing costs associated with the purchase of your home, as well as general moving expenses. Plus, there may be certain things about the home that you want to fix up immediately upon moving in. The more money that you have in the bank, the less stressed you will feel with the expected – an unexpected – costs as a first-time homebuyer.
3 – Look at different mortgage options.
Next, check out the different options that you have for your mortgage. There are multiple types of loans that you can take out for your mortgage, which will help you to figure out how much you will need for your down payment, what types of homes are in your budget to purchase, and where your credit score should be. Some different types of loans for a first-time homebuyer include conventional loans, USDA loans, FHA loans, and VA loans, which are exclusively for veterans. Look into each type of loan to learn more about what specific standards you need to meet to become eligible for each one.
4 – Get pre-approved.
When you are shopping around for a new home as a first-time homebuyer, it may be tempting to dive right into the browsing process. However, you should work to get a mortgage preapproval before you begin looking at properties, so you know what you are up against. This will help you to determine an overall estimate on the amount of home loan you are eligible for, based off your income, debt, credit score, and more. Remember, prequalification is different from preapproval, but both are extremely important and helpful!
5 – Maintain your credit score.
Once you know that your plan is to purchase a home, work to maintain your credit score and keep it as high as possible. During this time, you should avoid taking out a new credit card or loan, overspending, and making late payments. Try your best to stay as stagnant as possible so that you will not risk your final approval on your home.
6 – Know what you’re looking for.
Lastly, know what it is that you are looking for! What is a dealbreaker when it comes to your first home? Where are you looking to purchase? What amenities are required for you to have in your home? Make a list of what you need, what is a non-negotiable for you, and what is just something that you want or like. This will help you to quickly narrow homes down during your search!