Buying a home for the first time can be a daunting and confusing experience. However, if you’re armed with the right information, you can simplify the process and reduce the stress involved. Take a look at these essential tips.
Be Realistic About How Much You Can Afford
When buying a home for the first time, it’s hard to know what you can afford. Typically, a home is the most expensive purchase that most people ever make, and it can be hard to really conceptualize what all those numbers mean. Ideally, you should figure out what your monthly payments are going to be and you should look closely at your budget to ensure you can afford the payments.
Don’t Forget the Other Expenses
However, in addition to thinking about your monthly mortgage payments, you also need to ensure that you can afford repairs, property taxes, and other expenses. If you’re buying a home for the first time, you probably don’t know what to expect. As a general rule of thumb, you should set aside 1% of your home’s value for repairs. For instance, if your home costs $300,000, you should put $3,000 in a savings account every year. Then, when something breaks down, you should have the funds you need to fix it.
With property taxes, you just need to find out what they are and budget for them. Finally, don’t forget closing costs or other fees associated with the mortgage. Talk with your lender so you know what to expect.
Make the Largest Down Payment Possible
When you make a down payment, you instantly reduce the amount of money you are borrowing, and by extension, you reduce your monthly payments. That, in turn, reduces your stress. Try to make the largest down payment you can, but at the same time, try not to completely deplete your savings account. Ideally, you want some cash on hand in case an unexpected emergency pops up.
Note that if you don’t have the funds to make a large down payment, that is okay. Programs through the FHA, USDA, and VA make it possible to get a home with a small down payment or no down payment at all.
Remember to Look for First Time Home Buyer Programs
Buying a home for the first time is challenging for a lot of people. To make the process easier, there are programs designed just for first time home buyers. Don’t forget to look into these programs. When possible, talk with your mortgage lender to see if they can help you find assistance.
Pull Your Credit Report Before You Start
Ideally, you may want to pull your credit report before you start shopping for a mortgage. Then, take some time to fix any issues. If you have judgments or accounts in collections, pay them off. If there are mistakes on your credit report, try to contact the entity that posted that information on your report and have them remove it. Also, see if you can pay down credit card debt as much as possible.
At BrightPath, we work hard to make the process of buying a home for the first time as easy as possible for our clients. To learn more, contact us today.