How to prepare to buy your first home

Real Estate | 3 Nov, 2021 |

Did you know that first-time homebuyers make up around 31% of all homebuyers? Around 6.5 million homes are sold each year in the United States.

Buying a new house is a stressful time for everyone, but especially first-time home buyers. When buying a house for the first time, you don’t know what to expect.

You have to figure out how to prepare financially, how to choose the right house, and how to navigate the paperwork.

Are you wondering how to prepare to buy your first home? If so, keep reading to make buying your first home easier.

Review Your Finances

If you are thinking about buying a new house, one of the first steps is to review your finances. Start by looking at how much money you make each month and your expenses.

How much money are you comfortable spending on a house each month? Keep in mind that in addition to paying for your mortgage, you also will be paying for homeowners insurance.

Be conservative when estimating how much you can spend each month. If you choose a house that is too expensive, you put yourself in a financial bind if you get laid off or have an emergency.

When looking at your finances, it’s also important to consider your savings. As a general rule of thumb, you should save up around 20% for the down payment.

If you haven’t saved enough money, you should create a plan to save up the amount you need to buy your first house.

Know Your Credit Score

Once you finish reviewing your finances, the next step is to know your credit score. Your credit score is a measure of your creditworthiness, and it will affect your ability to qualify for a house mortgage.

Your credit score will also play a big role in the type of mortgage you can get, interest rate, and down payment. There are three different credit bureaus, so be sure to check your score from all three.

If you don’t have a good credit score, it may be worth it to improve your credit before buying a house. To improve your credit, make your payments on time, pay off debt, and don’t apply for new credit.

Compare Different Types of Homes

The most fun part about buying a new house is thinking about what you want. Are you looking for a single-family home, a condo, or a townhouse? Would you prefer a big home with tons of space or a small cottage?

You also should think about the neighborhood you want your house to be in, if you want a yard, and what type of finishes you like. You won’t get everything on your wish list, so it could help to rank what is most important.

When thinking about your future home, be sure to have the right expectations. More than likely, your first house won’t be a mansion.

Look at Mortgage Options

Unless you plan on buying your house with cash, the next step in the process is to find a mortgage. There are several different types of mortgages for first-time homeowners.

You can choose from a conventional mortgage, USDA loan, FHA loan, or a VA loan if you served in the military. Each of these loans has different requirements and conditions, so be sure to compare them before choosing.

If you are a first-time homeowner, you may qualify for financial assistance Check if your state or local area offers any assistance for new homebuyers.

Choose a Real Estate Agent

To help you find the best house, you are going to need to hire a real estate agent. Your real estate agent will help you find houses that match your needs, show you the house, and negotiate with the seller.

When looking for a real estate agent, start by asking for referrals and reading online reviews. Once you have a few agents in mind, interview them to find the best fit.

The best real estate agents are professional, willing to answer your questions, and have your best interest in mind. Be sure to let them know you are a first-time homebuyer. 

Look at Houses

Once you find a real estate agent, you can start looking at houses. One of the most important parts of shopping for a house is the neighborhood. While you can renovate the house, you can’t change the neighborhood.

Be sure to choose a house in a neighborhood that fits your lifestyle. While some people will prefer living in the city, others will prefer a family-friendly neighborhood.

When choosing a house, think long-term. While a small, fully-renovated house may look appealing, a large fixer-upper may suit you better if you plan on starting a family.

Make an Offer

After you find the perfect house, you need to make an offer. If the housing market is hot, you may have to make an offer over the listing price to compete with other homebuyers.

If the housing market is in the buyer’s favor, you can offer under the asking price. Work with your real estate agent to determine how much money you should offer, but be sure to stick to your budget.

Get House Insurance

Did the home seller accept your offer? If so, it is time to get homeowners insurance. House insurance will cover the cost of your belongings and the house if anything goes wrong.

If you live in an area that is prone to flooding, you should pay extra for a flood policy. When choosing a house insurance policy, go with one that covers the cost of all your belongings and the house value.

Now You Know How to Prepare to Buy Your First Home

Buying a house for the first time is a stressful experience because you have to figure out your finances and find the perfect home. If you want to know how to prepare to buy your first home, keep these home buying tips in mind.

Did you find this house buying guide helpful? If so, check out the real estate category for more home buying advice.

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