Buying your first home can come with its own special set of challenges. You may have heard horror stories from friends or family and are now feeling intimidated by the process. Or, you may feel uncertain about the financial obligations and the legal details. However, with the right information and proper planning, your can have a positive first-time home buying experience from start to finish.
Looking at the Budget
Before you make any major moves, figure out what’s affordable to you by looking at your budget. The best way to determine it is by calculating how much income you earn per month, and then set aside no more than 31 percent for mortgage and housing payments. Make sure to factor in a down payment for a mortgage, as well as housing expenses like home warranty, maintenance, home insurance, and property taxes. These steps may sound tedious, but they will get you started in the right direction.
Once you have done this, the exciting part comes: attending open houses. Getting an idea of different types of homes will help you determine whether houses in your price range will suit your needs. The home’s location and its condition affect the asking price. Also, consider the type of neighborhood you want to live in and the amount of money you are willing to spend for upgrades.
Getting a Loan
After you have completed the initial stage, you can begin preparing to get a pre-approved loan. Whichever loan you choose will come with its own set of closing costs. Whether you plan to cover the upfront costs with family contributions or savings, creating a thorough budget is essential in dodging potential hazards. Also, it is a good idea to pay off as much debt as you can. See to it that any remaining debt doesn’t cause a negative blip on your credit report. Plus, take your time finding a lender. Choose a licensed company, and don't sign until you are comfortable with the terms. Doing all of this will give you greater negotiating power, resulting in a more positive home-buying experience.
The Buying Process
Once your loan is secured, it’s time to do a more thorough search for homes that will fit your budget. Don’t be overwhelmed by the buying process; enlisting the services of a real estate agent will allow you to focus more on the fun aspects. A good real estate agent will have the expertise to negotiate the best competitive offer. Before you make an offer on the home you choose, think of the highest price you are willing to go.
When competing with many bidders, it’s a good idea to send the offer in a personalized letter. This could give you an edge over the competition. Also, your agent will guide you through the closing process. There is a lot of paperwork involved; read all the documents with your agent, and ask any questions about provisions that you don’t understand.
Getting the Keys
When you receive the keys to your first purchased home, a feeling of victory usually replaces the mounds of stress. Just keep in mind that homeownership comes with responsibilities and expenses that you never encountered as a renter or while living at home.
Your budget will be a vital tool in meeting this challenge. It should reserve funds to cover the moving and setup costs, which will make the process much less stressful. As for moving, paying a little extra to rent a large moving truck saves gas and manpower. Also, you can never have enough bubble wrap and duct tape for packing your belongings. Most likely, the space in your new home may be three times larger than your rental space. So, you will need about three times the amount of furniture, waste baskets, towels, shower curtains, mats and other accessories.
Roofs leak and plumbing systems fail over time. It is essential to budget for maintenance and upkeep expenses. Your budget should feature an emergency fund to cover any unplanned expenses. A good homeowner’s insurance policy should back up this fund. Another useful method is to create a flexible budget with a worse case dollar amount and a best case dollar amount.
Buying a home for the first time is an exciting, major step in your life. It is a big accomplishment that requires a ton of commitment and stamina. Staying informed and using a sound budget strategy will make the payout even sweeter.
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