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Becoming a homeowner is one of the most thrilling next steps in anyone’s life. You’ve gained the financial independence you need to feel comfortable venturing into big commitments, and there’s truly no better feeling than entering the real estate market to find a home to call your own.
We won’t be the first to tell you that buying a home isn’t a simple or easy process— it’s one that takes plenty of time, planning, and painstaking research. As one of the most expensive purchases you’ll make in your lifetime, it’s well worth arduous labor. Using this guide, we’ll walk you through everything you need to know about buying a house.
Do Your Research
As you venture into the homebuying process, it’s important to evaluate your own financial situation, examine the current status of the housing market and, of course, take stock of your desires, priorities, and objectives. Doing all of this upfront research will help lay the foundation for which you begin your house hunt and budget planning.
Naturally, part of this process involves checking your credit score, analyzing your spending habits, and studying online to find out the average going price of homes sold in the location you want to buy in. Finding answers to the following questions would also be incredibly insightful for you:
- What is compelling you to buy rather than rent?
- Do you have any financial roadblocks that could affect your ability to secure a mortgage with favorable terms?
- Do you have any large, outstanding debts that could make budgeting more difficult?
- What are your must-have amenities in a home?
- What factors do you consider to be deal-breakers in a home?
- What factors are you flexible on? What factors are must-haves?
- Do you plan on hiring a real estate agent?
Craft a property wishlist
Crafting a property wishlist is the most enjoyable portion of the home-buying process. If you have been dreaming of a futuristic minimalist home in the middle of a massive metropolis or a spacious coastal hideaway with floor-to -ceiling windows, now’s the time to make good on those dreams and turn them into a reality. Working out those specifics early on will help you narrow down your search and optimize your time spent looking.
The better an idea you have, the simpler it will be for you to pare down your selection and speed up the touring process. Consider splitting your wishlist into two: the must-haves and the nice-to-haves.
Check your credit score
In order to purchase a home, most people will need to secure some degree of financing— so unless you’re paying in cash, you’ll need to do your fair share of research into your available mortgage options. But before you even think about weighing your options, you’ll need to first ensure that you have a good enough credit score to get approved for a favorable loan, especially for one with an attractive interest rate.
You will need to build a positive rapport with lenders and that begins with providing a clear history of paying your bills on time and maintaining a budget that exemplifies your ability to live within your means. We highly recommend checking your credit score before you start applying for any mortgage or home loan. Most traditional mortgage lenders require a 620-640 FICO score.
If your score doesn’t fit inside of that range, consider dedicating time to improve your credit score. The following steps can help boost your score:
- Setting up automatic payments to ensure you never miss a payment deadline
- Minimizing your credit utilization rate by paying off any outstanding debt
- Diversifying your credit profile by applying for a variety of credit types, including
- Personal loans
- Auto loans
- Credit cards
Get help from a realtor
If you’re a first-time homebuyer, it won’t be soon before long that you realize the real estate market can be a bit relentless and confusing without the right guidance.. Receiving assistance from a reputable real estate agent can help you get to know the many intricate details of home buying and can even help you narrow down the options that work in your best interest.
At first, you may think it’s far out of your budget to enlist the assistance of a realtor to help on your behalf, however it is worth noting that the seller, not the buyer, pays for the fee imposed by realtors. One stipulation to note is that this is usually factored into the overall price of the property, which usually amounts to anywhere between 5-6%,
Ultimately, realtors are experts in their field, and if you’re new to the home buying scene, having a person in your corner who understands everything about buying a home is a responsible investment.
Compare your financing options
You will be better prepared to look at your borrowing prospects when your credit score is in tip-top shape. There are several distinct types of specialized home loans that could be better tailored to your particular circumstances. For example, if you’re classified as a low-income borrower, choosing an FHA loan might be the perfect funding option for you. Or if you’re an active duty military personnel, a VA loan may offer the best bang for your buck. There are even specialized options for those who work in the agricultural industry.
Make sure to explore all of the alternative methods that are open to you before you settle on a traditional mortgage.
Key takeaways
Buying a house is nothing short of a big deal, so as you venture into this next chapter, it’s okay to feel overwhelmed, stressed, and unsure. To avoid the brunt of your inevitable stressors, be sure to take the proper precautions to ensure you make the right decision before signing your name away on a mortgage and taking your photo in front of the “SOLD” sign. You’ll gain the peace of mind that you deserve and a house you love with these genius home buying tips.
Did we miss anything? What are your best home buying tips for first-timers?