Your first home is a major investment, and you want to make good choices when it comes to the place that will be such a big part of your life. When deciding where you will spend that much money and time, the keys to success are planning and preparation. Here are the things you need to do to ensure the process goes smoothly from start to finish.
Prepare financially. Before you can begin a serious housing search, you should put together a practical budget. Tally your total monthly income from all sources, and also compute your monthly expenses. This will give you an idea of where your money normally goes, changes you might need to make, and what you can afford. You will then need to save for a down payment. Dave Ramsey suggests using a mortgage calculator to help with figuring your numbers. Traditionally, a mortgage down payment is 20 percent, but some conventional loans require as little as 3 percent down. There are other mortgages which require no down payment for home buyers who meet particular criteria, such as VA loans, which are secured by the Department of Veterans Affairs. Your lender will check your credit before you can qualify for a loan. If you have any issues, resolving them can take time, so check your credit report long before you apply for a mortgage. Once you are in a solid financial position, you can apply for pre-approval with a lender.
Learn about the market. Once you have a good idea of how much you can afford, you can start deciding your search criteria. Look at what is available in your area, and make some property comparisons. For example, homes in Sarasota, Florida, brought an average sale price of $255K last month. Weigh your priorities, deciding what your non-negotiables will be, what aspects of a property would be desirable, and what you would find in your dream home but that might be out of reach. Perhaps you want a large, fenced yard for your dog with room to add a swing set later, or you’re craving a fireplace for lounging in the winter, but while it’s on your wishlist, you could live without it if a property offers the right number of bedrooms and bathrooms. You might want to use a home buying checklist to help you develop your personal preferences.
Connect with help. As Entrepreneur points out, there is no substitute for connecting with a professional real estate agent to help with your housing search. The pros know the market, they know the area, and they know the legal ins and outs of home purchases. Ask around for referrals from friends, family members and coworkers, and find someone you trust. It’s also crucial to hire a professional home inspector before you close on the property. It’s a small investment toward safety and peace of mind, as they will check the premises for any concerns such as illegal home additions, problems with systems, mold issues, leaks, and other potentially hazardous or troublesome issues. The last thing you want is for your first home to be a money pit or a safety concern. The inspection gives you a potential out if necessary, and it’s also an opportunity to negotiate with the seller for repairs or to modify the purchase agreement or price.
Taking up residence. Moving into your new home is exciting, but you want to ensure you are organized, prepared and efficient. Ensure you collect all your moving supplies, including boxes of various sizes, permanent markers, and packing tape. Allow ample time to pack, as it always takes longer than expected, and mark your boxes carefully as to what the contents are and room designation. One idea for streamlining the moving process is to color code your boxes. You can do this with tape, markers, or whatever method you prefer. It makes it easy to glance at a box and know immediately where it goes.
Buying your first home can be both intimidating and exciting. It’s a big purchase, so plan and prepare well. With the right strategies, you’ll be settled in and comfortable in no time.
What to read next: Understanding Home Inspections