Buying your first home is a very exciting time, but first-time homebuyers can also feel a bit anxious if you do not have all the information you need or are not fully prepared for all the costs necessary to buy a home.
Here are some things to consider to help you be prepared for your big move.
- First and foremost, determine a realistic amount for how much you can afford.Consider your current monthly budget, leave room for miscellaneous home costs and repairs, like HOA fees, taxes and insurance. Then determine the amount you can afford for a house payment, considering what percentage of your take-home pay can be used.
- Pay off all debt. Carrying debt will not only decrease the amount you will qualify for but can also add stress to your monthly bottom line
- Save for a down payment. Having 20% down is ideal, that will get you into a position of not having to pay Private Mortgage Insurance (PMI).
- Save for closing costs. Typically, closing costs are 3-4% of the purchase price. Once you have a good idea of the home price, you can get to this number easily.
- Loan pre-approval. Once you have paid off debt and saved for closing cost, it is a good idea to have a lender pre-approve you for a loan. This will help expedite the closing process and give you an idea of what amount you actually qualify for.
- When it comes time to finding the perfect house, research desirable neighborhoods to find the best fit.
- Hire a real estate agent that can help you navigate the maze of open houses and do all the necessary paperwork!