Buying your first house can be difficult, here are some ways to make it easier
Buying a home for the first time can be a daunting experience, to say the least. For many first-time buyers, there is so much information needed to be accounted for before purchasing a piece of property that, often times, it causes them to be overwhelmed and left in a state of confusion. People are simply wondering, “where do I begin the process of looking for a house?” Or maybe they found the house of their dreams and are asking themselves, “where do I go from here?” Luckily, there are a plethora resources available to assist you in your once in a lifetime journey, but listed below are some of the key factors that you should consider when seeking to buy your first house.
1.) Do I need a house?
First and foremost, ensure that you are absolutely committed to purchasing a home. While a home makes for a great, steady investment, it is also a massive undertaking that will affect your future for years or even decades to come. There are many other alternatives to purchasing a home, such as renting a flat or a condo. Not only are apartments cheaper, but the prerequisites for renting one are much less demanding than buying a home.
Just have an honest conversation with yourself. Ask, “do I see myself being happy staying in the same place for many years whilst having to pay a mortgage?” or “is a home going to benefit me more than an apartment would?” Another question you should definitely ask yourself is "am I financially capable of purchasing a home?" Like a vast majority of Americans, there's a good chance you have an appreciable amount of debt in the form of car loans, student loans, and credit card debt so it may not be wise taking on an additional financial commitment. You don’t want to incur more financial hardships if your finances aren’t stable.
2.) Have I checked my credit?
If you are like the majority of Americans, chances are you don’t know what your credit score is. Before buying a house, obtain your credit reports in order to identify what your score is and examine them for any potential errors. Any inconsistencies on your credit report can lower your score so it is in your best interest to ameliorate any mistakes.
Your credit score is going is determine whether or not you get approved for a loan and, in addition, it is the single biggest factor in determining the APR for said loan. If your credit score is low, you probably should wait a few years to bring it into an acceptable range before attempting to acquire a home loan. High APRs can cripple you financially because of the buildup of interest throughout the years.
3.) Location, Location, Location
If you’re still intent on buying a home and your credit score is within an acceptable range, start searching where you want your house to be. If you are looking to spend less money and instead search for a cheaper house, don’t bother looking for one deep in a metropolitan area. When it comes to real estate value, most of the homes and apartments located in posh areas are going to be ridiculously priced. Instead, start venturing outward towards the suburbs. You’ll have to sacrifice commute time for pricing, but to any sane person that should be relatively reasonable.
Things to consider when finding that perfect neighborhood:
· Noise pollution i.e. airports, railways, busy roads
· The frequency of crime in the surrounding areas
· The quality of local schools and extracurricular activities
· The general atmosphere and community
4.) What will I pay on a month to month basis?
If you have already found a house in a particular location, try finding out what the expected monthly costs will be if you were to buy it. Take into consideration that you will have to pay homeowners insurance, taxes, and many other fees, so try to develop a relatively accurate picture of what costs you will endure in the future. By doing this, you will understand your financial potential and determine whether or not a potential buy is a realistic option. You definitely do not want to commit to a property that you do not have the means to maintain.
In addition, calculate what you will pay for your mortgage each month. A good place to start would be mortgage calculator. Their calculator provides detailed information related to everything mortgage.
Tip: Call a local insurance agent as they will be able to offer you estimates on homeowners insurance depending on the area that you are looking at.
5.) Get preapproved for loans
Look to see if you can get preapproved for loans so you can have more leverage in the buying process. For competitive zip codes, where houses sell fast and are difficult to come by, having a preapproval for a home loan signifies to the seller that you are not only ready to buy the house but you are capable as well. This will make you more ‘attractive’ bidder compared to other potential buyers that may be competing with you for the same house.
6.) What about closing costs?
If you’re a first-time buyer who is definitely concerned with budgeting, you might want to know about “closing costs.” Closing costs are a collection of different fees that a buyer must pay to ‘officially’ be in possession of a house. Included in the closing cost are title fees, taxes, "homeowners’’ association fees, and much more. A quick look over at Bank Rate shows that the average closing cost in the United States for a house that costs $200,000 is estimated to be $2,128 so make sure you take this into account when finalizing your purchase.
When purchasing a home, make sure the decision you make is a well-thought out one. Don't make the mistake of buying property that you will grow to hate because after you sign that contract you will have much less flexibility to maneuver. This will be probably one of the biggest decisions you will make in your lifetime so choose wisely and gather as much information as you can before any major move!