Before buying a home, your biggest purchase was probably a car. Purchasing a place to live is a major step up -- from thousands of dollars to hundreds of thousands.
That's a scary thought, and it's a purchase that can cause major problems if you get it wrong. There are, however, steps you can take to ensure that the process goes smoothly. Doing these things won't guarantee that your purchasing process goes well, but it should give you a much better chance of having a good experience.
1. Understand your finances and purchasing power
How much house you can buy will be largely determined by three things:
- Your income.
- Your credit score.
- How much money you can put down.
Potential lenders will look at every aspect of your finances. Your credit score will be a major factor, and you have some control over that number. Paying off any credit card debt should improve your score. It's also important to avoid opening any new credit accounts or taking out any loans during the period before you plan to apply for a mortgage.
Your income and down payment will be a major factor with lenders as well. Most will want to see your housing payment take up no more than 28% of your total monthly income. You can lower that payment by putting more money down.
No lending rule is absolute, but you should have a strong understanding of what you look like to lenders and how much they may be willing to lend you. That will also save you some time in that you won't look at a lot of homes you can't actually afford.
2. Know what you want
While you have never bought a home before, you have lived in one -- probably a few. That should give you an idea of what your preferences are. Do you have a set number of bathrooms or bedrooms you absolutely must have? Is there a neighborhood you want to live in or something you want to be close to?
You should also consider what type of property you want. Do you prefer living in a single-family home, or would a condo in a building be more to your liking?
The more flexible you are, the more choices you will have. That said, it's very important to know what you can't live without and where you're more willing to bend.
3. Find a real estate agent
Choosing a real estate agent is a bit like dating in that you can see more than one before making your choice. You can do that by seeing properties listed by a specific agent and getting to know him or her. In many cases, people you know will also recommend agents they have worked with, or you may have relatives in the field.
You want someone you are comfortable with who will put your needs first. It's your first home purchase. You may need a lot of hand-holding and may want to see a lot of options before making an offer. Find someone focused on putting you in the right house above everything else.
It's probably not forever
Your first home probably won't be one that you live in for the rest of your life. Focus on something that meets your needs now and fits into your budget and where you will be comfortable for at least a few years. Be willing to compromise (to a point), because it's very hard to find an absolutely perfect home.
On the other hand, don't settle and buy something you don't like just because the process can be frustrating. A tight housing market can make things hard on first-time buyers. Just take your time, be patient, prepare as much as you can, and trust that you will eventually find the right home for you.
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