One of the biggest steps you can make as an adult is buying your very first home. Starting this process can seem so overwhelming, and while there are a lot of different factors to consider, becoming a homeowner is definitely worth it. If you are looking to get started down the wonderful path of home ownership, take a look at a few of these important tips to help ease some of the anxiety and get you prepared for this exciting new journey!
1. Examine your Finances
Debt to Income Ratio
While we know that it is not always fun or “kosher” to talk about finances, when you are making a huge financial investment like buying a home, the most crucial part is knowing that you are in a healthy place financially. A lot of people make the mistake of thinking they are financially healthy just because they have a good income, but there is so much more to it than that. You also have to consider how much money you have coming out every month including all of your combined debt (car payment, credit cards, student loans, etc). Because regardless of how much money you make, one of the biggest factors at play when getting approved for a mortgage loan is going to be your debt to income ratio.
Saved up Funds
In addition to the money you have coming in and out every month, another major factor you should consider is how much cash you have saved up. A healthy savings account is always important, but when you are buying a home, it is even more necessary. You don’t want to put every dime you have into buying a home, because home ownership can come with new expenses that aren’t always factored into your mortgage payment. Not to mention, you don’t want to end up being “rent poor”—your new home should be a blessing to you and your lifestyle, but bad financial planning can turn a good thing upside down quickly.
2. Get Pre Approved
Getting pre approved for your loan is definitely something you will want to do before you start seriously looking at homes to make offers on. Before you can get pre approved, however, you need to shop around for the best mortgage for you—they are definitely not all the same! One great resource for finding lender options will likely be your real estate agent. It’s their job to know who has the best rates or deals in your area, so this can be a very beneficial ally for you! There are several types of loans available, all with different requirements when it comes to down payments, credit score, interest rates, and more. So, working with someone who knows the game will be a time and money saver.
3. Know What you Want
Like we said before, this is a huge financial investment and an awesome next step to take in your life, so you definitely want to make sure you have all of your bases covered. One thing you could do is to have a “negotiable” and “non negotiable” list for what your future home needs like how many bedrooms it should have, a floor plan you are partial to, or what part of town you like. Knowing what the most important things are to you might help save you down the road when the honeymoon stage of home ownership wears off a bit. If being too far from work or not having space to entertain is going to be a deal breaker, then having those things defined from the very beginning of the house hunting phase will help the whole process go by smoothly. Then you can breathe a sigh of relief and revel in the excitement of taking the plunge to buy your very first home.