Buying your first home is one of the biggest decisions you will make in your life. But before you go around looking at homes, there are several things that you need to consider first. Here are 5 important things to know before taking the plunge:
- Know your home buying goals
Before diving into the home buying process, ask yourself whether you are ready to buy a home or not. How long do you plan on living in your chosen area? Are you mentally and financially prepared? Have you made a budget and evaluated your spending habits, so you know where your money is going? Answering these questions before making a move will help you reach your decision without wavering.
If you decide to buy a home, make a list of what your needs are versus and wants. Are you searching for a single-family home, townhouse, or condo? Or are you looking for something more specific like waterfront property? Features like the number of bedrooms, bathrooms, as well as the neighborhood should also be factored in. Remember what they say, it’s all about location, location, location!
- Know all the costs involved
Many first-time homebuyers are surprised by the true cost of buying and owning a home. There are added costs that come with the down payment and mortgage payments. Closing costs, for one, include lender fees, attorney fees, title company fees, prepaid costs, and homeowner’s insurance, to name a few.
First-time homebuyers must also be financially prepared for upkeep and maintenance, utility costs, and property taxes.
- Get your finances in order
You need to be financially qualified if you want to buy a good home, so keep your finances in check. Particularly, your credit score affects your risk to lenders and your ability to secure a mortgage. You’ll want to keep your FICO score around 600 to 700 for most lenders to accept you. Although there are some lender that will take as low as 580, you must keep in mind the higher your score the better your interest rate.
However, if your score falls lower than the standard number, there are plenty of ways to pull it up. Simple ways include paying all your bills on time and paying down and or off any outstanding debt. Your utilization of credit cards is a big factor when it comes to your credit score. Avoid making big purchases and opening a new credit card as well. And by all means do not go out and buy a car before getting in the home of your dreams.
- Get pre-approved for a mortgage
One of the most common mistakes first-time homebuyers make is not getting pre-approved or even pre-qualified ahead of time. A mortgage pre-qualification is a letter from your lender that tells how much home you can buy based on your assets, debt, and credit history that you have told the lender. Your pre-approval takes it a step further. Now you have taken the time to provide to the lender what was stated in your loan application and all documents have been verified. A pre-approval helps you stand out from other buyers and it’s a useful bargaining tool when negotiating for a better deal, so there’s no reason not to get one.
- Work with a local real estate agent
As a first-time homebuyer, it’s best to have a licensed and experienced real estate professional by your side. From finding a home to negotiating the right deal, they will guide you all throughout the entire home buying process. They also protect your interests and keep you informed about the things you need to land the right home.
Ready to look at houses for sale? My team and I would be more than happy to assist you in your home buying journey. Call us today at 704.488.5458 or send an email to Valarie(at)ValarieRBrooks(dotted)com.