Home buying is the right decision when the expense and responsibility of ownership seem worth the effort to have a place to call home. People can feel ready as soon as they have a reliable job and money set aside for a down payment. However, there are other things that every first-time homebuyer must do before they sign their name on a mortgage document.
#1. Talk to Lenders
Homebuyers need a pre-approval for a loan before they begin to shop. Pre-qualifying is not the same. Qualifying only shows that buyers can receive a loan if they were correct with their stated income and credit scores. A pre-qualification involves research of credit histories, bank accounts, and more. An approval letter from a lender allows agents and home sellers to know the buyers are legitimate. Buyers have more negotiating power when sellers know the deal will not fall through for the lack of financing.
#2. Know the Area
A dream home can tempt people into buying a house in an unfamiliar area. Inexperienced buyers may think they will learn to love their neighborhood or the commute, but this is not always the case. Research the area to ensure it meets all preferences for services, jobs, community activities, and any other important factors. Make a list of all things that matter to each person who will live in the home and only shop for houses in areas that meet all or nearly all of the preferences.
#3. Buy Below Limit
Lenders may approve a loan up to $200,000, but that does not mean people should only look at houses in that price range. Always shop for houses well below the limit because ownership includes more expenses than many people expect. A less expensive home allows the owners to have money for improvements or repairs, as well as a financial cushion for when property taxes, utility costs, and homeowner’s insurance rates rise – and they will.
Buying a first home could be the start of a line of homes that includes upgrades to a dream home, or it may mean buying something affordable and turning it into the dream. Careful planning and shopping increase the chances of the experience becoming even more rewarding than the buyers expect.