Buying a home can be a daunting task for most first–time home buyers. Many find the buying process so overwhelming that they eventually decide to rent instead of purchasing their own house, and sometimes this is the wrong choice. Currently, the housing market represents a great opportunity for the people that are buying a home for the first time. The inventories are full of for–sale homes, the prices have dropped and the interest rates are also very low. For the first time buyers it can be the perfect time to find your dream home. If you are in this situation, check out the tips below.
First of all, decide on a specific budget. That’s where it all begins. There are still numerous buyers who don’t have a budget in mind and get lost in the buying process. Establish a price range and only look at those houses that enter that range. Next, go to a bank and find out how much of your monthly income you can spend on the insurance premium, taxes and mortgage. Some banks will tell you that the proportion is 42%, others that it is 28%. It depends on the lender. Be careful with what you choose. If you borrow more money it means that you will have to repay even more interest. Don’t be greedy.
Take your time to properly calculate the housing budget. You can do this by evaluating the monthly expenses. Track them in a notebook and see how much you’re spending and how much money is left at the end of the month. Taking into consideration your savings, you can figure out when you’ll have all the money for the down payment. Thus, before signing a mortgage contract, make sure that you will be able to pay the monthly insurance payments, taxes, interest rates and principals.
The following tip would be to keep it as realistic as possible. After you’ve established your location and your budget, you can start thinking about the amenities that your first home should have. Everyone is looking for luxury, but your budget might not be ready for that. It’s important to do some research and see what your money can buy. Make the wish list according to that research. You might have to make some compromises, but remember that the house can be upgraded later on, when you have more money.
Look for a variety of lenders such as local lenders, regional banks, mortgage brokers and national banks and compare their offers and estimated payments and rates. After you’ve found the right lender, try to get a pre–approval. Get a mortgage pre–approval before you begin looking at houses so that you are in a better bargaining position. The pre–approval period typically lasts for up to 90 days, which is usually enough time to find and close on your new home.
Finally, after deciding on 2 or 3 homes, call on the services of a home inspector to have a house inspection. If you’re going to spend hundreds of thousands on a property, you will want to avoid any surprises, especially those that are not readily apparent when you are walking through the house.