Becoming a first time home buyer is one of the most important steps on the path from youth to adulthood. However, rising housing costs in major cities across the country has made the process more challenging than ever for first-time home buyers. From saving up for a down payment to meeting the necessary credit score requirements, purchasing a home can seem like a daunting task. Follow these tips to help the experience go as smoothly as possible.
Get a Pre-Approval
When you are ready to buy a home, take the time to get a mortgage pre-approval from at least one lender. Before you can make an offer for a house you like, you’ll need to have a pre-approval verification showing you will be able to get the necessary financing to complete the purchase.
It is important to note that the amount you get pre-approved for is not necessarily the amount you can afford. While it is true that your pre-approved amount is based on your income and existing credit obligations, there is no way for a lender to see your complete financial picture.
It is up to you to determine how much you can actually afford to pay each month. You should aim for your housing costs to amount to about one-third of your monthly income, after taxes. Don’t forget to think about how your financial situation might change in the future, including whether or not you plan to have children.
Know Your Priorities
When you first begin touring homes, it can be easy to get caught up in minor details that may not necessarily be the most important considerations. Set up a list of priorities, delineating what features of a house are most important to you. You’ll typically want to start with the number of bedrooms and bathrooms.
Once you have handled the basics, you can start to look for other features. For example, if you love to cook, you may prefer a larger kitchen at the expense of a game room or three-car garage. Similarly, families with children might prioritize open play space over a formal dining room.
Don’t Neglect the Home Inspection
Although it is likely that the home seller will have conducted an inspection prior to listing the home for sale, you’ll still want to have your own independent inspection completed. This is a step that many first-time home buyers overlook, but it could cost you big bucks in the long run.
A thorough inspection will alert you to any current issues with the property and those that are likely to arise in the future. If a particular home does have any issues, you’ll have added negotiating power in reaching a more affordable price. You’ll also be aware of any maintenance and repair expenses you can expect within the first few years of ownership.
Build Up Your Savings
When you own a home, you’ll have many expenses you didn’t have as a renter. Most prominently, you’ll be responsible for any repairs to the property. Aim to save up at least six months worth of expenses in case you lose your job or hit some other financial hardship. In addition, create a savings account specifically for home repairs. These can be quite costly, so it is best to build up savings totaling at least 10 percent of the value of your home.
Get the Financing You Need at Coastal Pacific Lending Inc.
Here at Coastal Pacific Lending Inc., we have a variety of financing options available that are suitable for first time home buyers. Get in touch at 888.214.8618 today to learn more.