| 11 Ways to Prepare to Buy Your First Home | |
1) Save, Save, Save -
Cut out as much frivolous, unneeded spending that you can and build up your savings accounts. Your goal there is to have as much money as you can for your down payment. The minimum is to have about $10 - $12k, and you can use a sellers assist to fill in the rest. There are programs out there that can help you if you have less than that, if the need is there...
2) Carefully review and know your monthly budget -
The goal here is to know what your monthly mortgage payment comfort level is. Look carefully at your budget, and again, cut as much "fluff" as you can, and look at what you could comfortably afford for a monthly mortgage payment. I also recommend trying to live as if you had that payment already, that way, when the time comes, it is not a big financial shock. And keep in mind the tax advantages of buying a home and how that will adjust your tax "burden" and overall income.
3) Educate yourself on the market you want to buy in -
You can do this by regularly visiting websites such as ChesterCountyHomesNow.com, Trulia.com, and receiving listing updates. Pay attention to homes that have changed there price, and when they sell, and how quickly. That way, when you are ready to buy, you are an expert on what you are looking for.
4) Keep an eye on the mortgage rates
Sign up to receive mortgage rate updates. It is a great way to know what the market is doing and stay on top of what's happening. You can do this by going to Wells Fargo's website.
5) Fix any credit issues that you discover
A good mortgage person can give you tips on what to do. Believe it or not, paying off balances on cards does not help your score. Paying them off over time is, mostly because the creditors want to see that you are able to repay your debt.
6) Reduce any reoccuring, monthly debt
Such as car payments, student loans, items like that. This will increase your ability to borrow.
7) Do not buy any big ticket items
Consequently, if reducing your debt is good, then increasing it is bad. As much as you can help it, do not go buy a new (to you) car and incur another monthly payment. This will significantly reduce your ability to obtain a loan.
8) Preview homes you think you might like:
When you see open houses, or if you have a good agent and they are willing to do some preliminary showings with you, go see some homes. Note what you like, what you don't like, what locations are good, what type of layout you like, what your tolerance for fixing things is, etc. . .
9) Learn the process and the terms:
Educate yourself on what the home buying process is, and what terms you will run into and what they mean. There are many variables that effect what you are able to do, and the more you educate yourself, the better off you will be.
I make it a point to help my clients in this area - I love sitting down with buyers who are a year or two from buying, educating them on the process, and then helping them plan what steps they need to take to reach their goal.
10) Find a great real estate agent
For most people, buying a home represents the largest financial transaction of their lives. So it makes sense to have professional help, especially if you're a first-time home buyer. A competent real estate agent can help you with many aspects of the home-buying process -- finding a home, validating the asking price, making an offer, negotiating with sellers, etc. You'll have a lot on your plate when buying a new home, so it helps to have someone in your corner to help carry the load!
11) Make a "Need vs Wants" list
When you get into the house hunting process, you'll want to know if each home offers those features that are most important to you. But before you can do this, you have to know what, exactly, those features are. Get out a piece of paper and divide it in half lengthwise. Label one side as "Want" and the other side as "Need."
Now write down the things you definitely need from a house, as opposed to the things that would be nice to have. Make photocopies of your list, and use it as a checklist when visiting a home for sale. Be sure to write the home's address at the top so you can refer back to it later.
Written By Chris LaGarde, Buyer Specialist with the Cindy Dickerman Team of Keller Willams Real Estate
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