For first-time homebuyers, it can be an exciting time and journey to go on. There are some precautions, however, that these first-time buyers should take in order to make sure that they’re getting the best deal they can while not getting the proverbial “wool” pulled over their eyes.
Check Your Credit
Before you get ready to attend an open house or begin the process of buying, you should be very aware of your credit. Get a copy of your credit report so you can see how clean the report is. Generally, the higher the credit score and the healthier the credit is will lend to you being more likely to be pre-approved for a mortgage at a lower interest rate. This is a crucial step of house hunting and you should do this several months before you start your hunt. When looking for your credit report, you can obtain one for free once every 12 months.
When the real estate market experienced the housing crisis, we found that mortgages were being given to those that very clearly did not have the means or ability to pay on the mortgages. This is where it’s important to create a budget before you begin your home search. This will help you figure out how much of a mortgage payment you can truly afford. A good rule to go by is by allocating no more than a third of your monthly household income to housing costs. These costs include mortgage principal, interest, taxes, and insurance.
Don’t Worry about the “Wants”
A common mistake of first-time buyers is that they are blinded by a list of things they want in a house, not just what they need in a house. When searching for your first home, seek out professional help and sit down with a real estate broker to determine what you truly need from a house, whether it be an open floor plan or even a pool, and what you want from a house, like an in-laws quarters or 5 bedrooms. Some items that should be deal breakers are the areas that you look in, square footage, or how easy it is to get to public transportation should you settle down in a larger city.
Again, while this is an exciting journey to go on, it’s best to head on your journey with a simple set of ideas about what you can truly afford from a house in terms of how your credit will affect payments and what your budget will be. Don’t get hung up on having that spare bedroom that you may not truly need. Especially when this is your first home, you may want to keep in your mind that you most likely won’t be at that residence forever. So, start small but keep those big dreams alive for goals for your future.