Buying that first house is exciting, but it can also be stressful. A Homes.com survey found that nearly half of first-time homebuyers felt nervous throughout the process, and a third were actually reduced to tears at some point.
There are many steps you’ll have to take, like applying for a mortgage, touring home after home to ensure you’re making the best decision possible, waiting to find out if your offer is accepted and whether or not the inspection will go smoothly, and it can be a lot to deal with. By arming yourself with knowledge, you can increase the odds of a more stress-free, positive experience when buying a house.
Table of Contents
Determine Your Budget and Understand What You Can Afford
There are a lot of expenses to consider when buying a house, and it’s important to understand what you can really afford. First, sit down and determine your budget, figuring in everything from the down payment and closing costs to the monthly mortgage payments, homeowners’ insurance, property taxes, and maintenance. You’ll want to ask yourself, “Should I rent or buy a house?” as you may not be financially ready to make that big investment. In some cases, renting makes more sense as you’ll only need to put a fraction of what you’d pay for the down payment and closing costs to move in, not to mention your landlord will likely be responsible for maintenance and repairs.
Know Your Credit Score
Before applying for a mortgage, you need to know your credit score. That number will affect the interest rate you can qualify for as well as make or break your ability to obtain a mortgage. Many credit reports contain errors, and just one mistake could reduce your score to the point that you’ll be denied the loan, or it will cost you thousands more in interest than it should. Knowing your credit score will determine whether or not you need to improve it by getting any mistakes removed, paying off debt, etc., before applying for a mortgage. A FICO score of 620 is typically the minimum you’ll need, but ideally, you should have a score of at least 680, the higher, the better.
Get Pre-Approved for a Mortgage
Getting pre-approved for a mortgage before you start shopping for a home is really a must. You’ll know definitively how much you can afford, and it will also make you a more credible buyer when placing an offer.
Research the Condition of the Local Real Estate Market
Once you’re pre-approved, or even before that point, you’ll want to research the condition of the local real estate market you plan to search in. Take a look at the inventory of homes for sale in the area, the prices, and demand for housing. You can check market reports from local real estate agencies and browse home listing sites. You’ll want to have a good idea of how much competition you’ll have when you make an offer.
Know the Type of Home and Neighborhood You Want to Live In
It’s important to slow down and think about what you really want, not only in a home but in the neighborhood. Do you want to be within walking distance to shops and restaurants in a more bustling area, or do you prefer a family-friendly neighborhood where kids can be seen playing in their yards? Consider how far you’re willing to commute to work, how safe the community is, and if it provides easy access to the things you enjoy doing. When it comes to the type of house, think about your lifestyle, whether or not you plan to start or expand a family – will it meet your needs now and for at least several years into the future?
