- Know what you can Afford
Use your time wisely and determine how much home you can afford first. The mansion with a pool may be what you’ve imagined, but if it’s out of your price range it’s a waste of your time looking at the home. Take a close look at your budget and see how a mortgage payment will affect it. Use an Excel spreadsheet to help you layout your budget and organize your expenses.
2. Determine your Preferred Location
Location, location, location is always key, right? Find the right neighborhood that will fit with your lifestyle or future plans. Visit the neighborhoods you like and get a feel for the community. Make a checklist with the must-haves to help determine if the neighborhood is the perfect fit. Is there high crime rate in the area? How are the schools in the area? How far would your commute to work be? Do they have a fitness center? Is there a dog park nearby? These questions will vary by your lifestyle, but are essential in determining the right neighborhood. Once you choose a preferred area, it is a good idea to visit the area at different times to better understand how it would feel living in that location.
Choose the neighborhood or area that you see yourself living in that will fit your lifestyle and find a local agent that knows this neighborhood/area well. Choosing an agent familiar with the area is a big benefit as they will be able to answer questions about the community, schools, average taxes and help determine if the area will be the right fit. Also, the agent will have a good understanding of fair market value of the houses in the particular neighborhood.
4. Prepare your Credit
Being one of the largest financial decisions you will make, buying a home takes preparation. Take a look at your current credit report to get an idea of where you stand. Talk with a lender about your plans of buying a home to have the answers to the financial questions you may have. Avoid large credit purchases when planning to buy a home. Car loans or lease may impact your debt-to income ratio, which may affect your ability to qualify for the home loan amount needed.
5. Have Closing Cost/Downpayment Funds
Many of the local lenders offer 100% financing for First Time Homebuyers! However, if you are working with a lender that doesn’t offer this, you may need 3 -10% down. Also, be sure to be aware of closing costs that you may have to pay on your closing date. Planning for these costs, even if not needed, will give you extra cushion if anything unplanned happens in the process.
6. Understand Rate vs. Points & Know Where You Stand with Lenders
Talk with your agent and/or lender about the rate or points system on your mortgage interest rate. Getting an in-depth understanding of this will help you determine which will work best for you.
You know what you can afford and where you want to live, so…Talk with your agent to help them find that perfect home for you!