Buying a home is an exhilarating, exciting process even though there are many steps and factors to consider. Knowing what to expect, can make this journey easy. Here are some steps that can help you to prepare for home ownership.
1. Cut unnecessary spending
Four-dollar lattes can quickly add up. Get serious about reducing expenses on carry-out food, restaurant meals, entertainment and new clothes. Make a realistic budget of how much you can afford to spend on costs that add up, such as eating out or shopping. When I bought my first home, I had to cut lot of extra spending to make my budget work out
2. Build a savings account
This is very important if you just started to think about buying your first home. Set up an automatic transfer to your savings account from each paycheck. You’ll need money for your down payment, and you may be responsible for closing costs on the loan. In addition to your mortgage payment, there will always be unexpected expenses and maintenance costs that come with owning a home.
3. Review your credit report
Credit score is very important for loan approvals. If you have missed payments or maxed out credit cards, consider delaying the purchase of a home until you improve your credit score so you can qualify for a lower interest rate.
4. Buy within your financial comfort zone
Determine a price range that’s realistic for you by getting prequalified for a mortgage. By prequalifying you will look at homes that are affordable and in your budget.
5. Make a list of priorities
Be honest with what is important to you. Is lack of public transportation a deal breaker? Do you want an older home to fix up or newer construction? Is the neighborhood walkable? Is the home energy-efficient?
6. Check out the neighborhood
Visit the neighborhood of your potential home at different times of the day to get a feel for what life is like there. Evaluate the condition of surrounding homes and access to your priorities, such as shopping, parks, schools or expressways.
7. Test-drive your commute
Try out your potential commute on more than one weekday. The longer your commute, the less likely you are to engage in community events, go for a workout or cook at home after work.
8. Know the pros
Who’s involved with home buying? Familiarize yourself with the key professionals involved in a real estate transaction.
- Real estate agents are licensed to negotiate the sale and purchase of real estate. To find an agent who suits your needs. Be sure to find an agent familiar with the area where you want to live.
- Home lending advisors will determine how much money you will be able to borrow and help you choose a mortgage option that best suits your financial situation.
- An underwriter will assess whether you are eligible for the mortgage loan. The underwriter will approve or reject your loan application based on your credit history, employment history, assets, debts and other factors.
- A real estate appraiser will examine the property you are purchasing and determine its fair market value.
- A professional home inspector will make sure the home and its components and systems are in good condition. Make sure you have your home inspected before you sign on the dotted line.
9. Close on your new home
The closing occurs when all contractual conditions have been met and financing is in place. You will review and sign papers and ownership of the property will be transferred to you. Once the meeting is complete, it’s time to move into your new home.