Owning a home is an amazing feeling because you have a place to call home. However, buying a home can be very expensive and stressful, especially for first-time homebuyers. Luckily, a bit of research and effort can help you buy the home you need.
Here are some tips you should know when you buy your first home.
Create an Emergency Fund and Pay Off Debt
Before you look at houses and applying for loans, look at any debt you have first. Debt can make it hard for you to get a loan, and if a lender approves you for a home loan, they may give you a higher interest rate.
Plus, you might juggle with more monthly payments than you can handle, so make sure you eliminate all your debts first. You should also create an emergency fund to pay for any sudden huge expenses that could occur when you own a new home.
A Realistic Budget
While you might have your eyes on a gorgeous home, you need to think about how much you can realistically afford each month. Pay for more than just the house, as well. You will also have to factor in insurance, taxes, and HOA fees, among others. These factors combined should not be over 25 percent of your take-home pay each month. If you did the calculations and see that it is over 25 percent, you need to look for a more affordable home.
Make a Down Payment
While many people think skipping on the down payment would be fine, we highly encourage you to put a down payment on your home. People suggest you put a down payment of around 20 percent or more on your home. When you save for a down payment, it means your total loan cost will be lower. Therefore, you can pay off your monthly payments quicker and potentially have a lower interest rate.
Preapproval for a Loan
Once you know how much you can afford and can make a down payment, it is time to get pre-approved for a loan. You should make sure you start loan shopping before you go home shopping. However, it may be difficult for you to get pre-approved by several lenders. You can find a mortgage broker in Provo, Utah to help you find the right lender for you.
The House Hunt
Now it is time for the fun and stressful part, which is house hunting. Since you know what your budget is, you can use the internet to search for homes that are within your price range. You can make it easier by getting a real estate agent because they know what houses will fit your price range and needs.
Once you see the homes within your budget, do not focus on solely the property. Think about the neighborhood, too. You want to choose a neighborhood is near places like schools, hospitals, and recreational places, among others. You should also consider other factors, like the crime rate in the area.
Buying a home can be overwhelming, but narrowing it down to steps and remembering a few tips can help you make a wise choice.