7 Things To Do Before Purchasing Your First Home
Buying a house is a major decision because the house will soon become one of your main financial assets. Here are 7 steps to take before you buy.
Take some time for self-reflection and thinking about the future:
Do you feel financially stable. Have you had your job for at least 2 years? Do you have a reliable income?
Are you prepared to make monthly mortgage payments? Do you anticipate any major expenses in the near future that would make keeping up with your mortgage payments difficult?
Do you plan to stay in this house for at least five years? The first five years of mortgage payments usually only cover fees and interest. Are you ready to settle down in one spot?
Ask yourself how much you can afford to borrow, what kind of mortgage would be best, and what kind of home would be adapted to the unique needs of your family.
- Raise your credit score. You can qualify for a mortgage with a credit score of 580, but you’ll have to spend more on fees, interest, and your down payment. You’ll get a much better deal if you wait until you have a credit score of 700 or above.
Look at your debt to income ratio. This is a good way to tell if you’re earning enough to afford a home. Ideally, the expenses linked to buying a home shouldn’t exceed a third of your income. Add up your mortgage payments, utilities, property taxes, and expected repairs.
Save money for your down payment. You can buy a home with a down payment of anywhere between 3% and 20% of the value of the home. The more you can afford to pay, the lower your mortgage payment will be. Look into getting an FHA loan to help with the down payment.
Plan for expenses for maintaining your home. You should count on spending at least 3% of the value of the home on maintenance each year. Create a saving fund to cover these costs.
Document your income and assets. Start gathering all the documents you’re going to need while you compare mortgage options.
Connect with a Realtor who can help find the right house for you. A Realtor can provide insight into the current market conditions and everything you need to know about neighborhood developments, so that you can make the best choice for you and your family.
Buying a house is an important decision and requires careful planning. Becoming a homeowner means that you’re taking a big step on the path of financial stability, and you’ll want to be prepared. Take the time to go over your income, boost your credit score, and make a list of what to look for in your ideal house. Then give us a call so we can help you get into the home of your dreams.