From budgeting, to the art of a deal, to understanding home maintenance, there is a lot to consider when buying a home. This can prove to be a large learning curve if you don’t know a lot about the real estate industry or general home handiwork. While this can be true for any home buyer, first-time home buyers can be at a disadvantage regarding this industry knowledge.
General Financial Readiness
Financial Readiness is a pivotal part of the home-buying process. Your home is likely one of the largest investments that you’ll make, and ensuring that you are financially ready for that expense is pivotal. Calculate how much you can afford based on your monthly income, potential expenses and current debt. Don’t forget to include important factors like your current credit score and how much you plan to use for a down payment.
Remember that you don’t always need a 20% down payment, especially as a first-time buyer, but it will help you avoid private mortgage insurance (aka PMI). A great broker or a financial advisor are both helpful resources for evaluating your current financial options alongside your future goals. Don’t forget to budget for unexpected challenges or expenses down the road; a buffer within your budget is key.
Evaluate Mortgage Options
First-time home buyers have access to additional mortgage options that general home buyers do not. Familiarize yourself with different mortgage types: FHA loans (designed specifically for first-time home buyers), VA loans (designed for veterans and service members), USDA rural development loans and traditional mortgages, will all have their benefits and downsides. Don’t forget that you may also qualify for grants or special offers based on your occupation, location, demographic or other qualifications. A savvy broker can walk you through potential options and make recommendations based on your needs.
Future Lifestyle and Location Goals
A starter home may be a great stepping stone to the home of your dreams, but it can be helpful to think of the long-term investment of a particular purchase. Consider the location and property type by looking into the neighborhood’s safety, school quality and proximity to work and community features. Assess your lifestyle goals and keep them in mind. You may want more space if you plan to start a family, have pets or work from home.
