First-Time Home Buyers:
Buying a home for the first time is exciting and rewarding, and if you are considering purchasing a home it is important to confirm that now is the best time for you to do so. The entire process is much easier when you can answer the following questions and knowing about as many of these as possible can save you time, effort, and money in the long run.
“Are you ready financially?”
Figuring out what you can actually afford is crucial to this process. You can go online and use mortgage calculators to get an estimate for what your mortgage payment might be, but those calculators won’t include other expenses related to homeownership like taxes, insurance, and maintenance.
The amount you want to save for a down payment and any closing costs is often forgotten about as well. Most mortgage lenders require between 5 and 10% of the home’s purchase price to be paid upfront as a down payment. You will want to save up as much as you can for a down payment because the higher your down payment is, the lower your monthly payments on your mortgage will be.
One of the ways to see if you can afford a home is to try setting aside your estimate monthly payment, insurance premium, and property taxes for at least 6 months. If you can manage this, you are in good shape to start the home buying process. If you can’t, don’t worry too much. You can still use this time to save for a higher down payment.
Another way to see what you can afford is to get pre-qualified for a mortgage. This will let you know what loan programs are available for you, revealing which homes are out of your price range and which ones aren’t.
“Are you planning to stay for a while?”
If you are planning on staying in the same place for at least 3-5 years, then buying could be a good idea. It’s harder to break even on the costs you spent to purchase the home if you turn around and try to sell it just a year or two later.
You also have to decide if settling in a certain city or area is what you want to do for an extended period of time. Depending on the market conditions or the career you have, it could be more beneficial to stay renting.
“Have you done your research?”
You can easily research the current market state in your area online as well as look for a real estate agent to help you with the process.
You can also research what type of home you want and think about if you can see yourself living there for 5-10 years. There is a big difference between what you need to have and what would be “nice.” With this research you can also create a list of your highest priorities and essentials that you look for in a new home and the in the surrounding area.
“Is now the right time?”
Money isn’t the only thing that can influence the timing involved in buying a home. Maybe you need more space because an elderly relative is going to be moving in with you, or perhaps a baby is on the way.
If there isn’t an imminent need for a larger space or a new home, then take your take your time researching what is best. The housing market could currently be flooded with homes for sale during a popular selling season, making offers more competitive. On the other hand, it could be an unusual season to buy a home, and sellers might be more willing to negotiate since there is little competition.