Getting ready to buy your first home is an exciting time – however it can also be quite overwhelming if you’re not adequately prepared. There are many factors that go into purchasing your first home, and you should ensure you’ve taken some time to list out what you’re looking for, what you can afford and what the long-term priorities are for the property.
Consider these five important tips for making the most out of the house hunt:
1. Get started as soon as possible
Finding the perfect house for you at the right price is not something that will happen over the course of a single weekend. This means you need to start preparing your plan of action as soon as you decide to buy a house. You’ll have to scour numerous real-estate listings, websites, newspapers and open houses before you locate the right place. Further, applying for credit and working through the real estate sale process will all take a considerable amount of time, so the earlier you get started, the better.
2. Figure out your down payment
Putting together enough money for the down payment should be the very first step you take when you begin searching for a home. Your down payment will also serve as the basis for what size mortgage you qualify for and how much your interest will run. While many people assume they need 10 or 20 percent of the home price to qualify for a mortgage, the truth is that there are other programs and options available that don’t require as much initial capital. For some programs, you might only need 3 to 5 percent of the total as a down payment. Contact your First Centennial Mortgage loan officer when you’re starting the process to see what options are available for you.
3. Get prequalified for a mortgage
Once you have a better sense of how much you can scrape together for a down payment, speak with your loan officer to get prequalified. This involves providing some financial information, such as your annual income, savings or investments. After you’re prequalified, you’ll have a better understanding of the overall price range you can afford. With that price range in mind, you can begin searching for homes.
4. Consider long-term and resale
Chances are, you’ll be living in your starter home for at least a few years, but you’ll also end up eventually moving out and into your dream house. This means you need to think about not only the long-term conditions but also the potential resale value of the property. If you don’t have any children yet, do you plan on it? If so, you might need to find a larger house with more rooms. Do you plan on selling the house in a few years to upgrade to a bigger dwelling? Buying a house on a busy street or in a poor school district might discourage future buyers.
5. Include all potential expenses
When budgeting, you’ll want to cover the listing price for the house and your monthly mortgage payments. But there are more expenses to consider for the overall cost of homeownership. In addition to the principal loan amount and interest, there’s also taxes, insurance, utilities, commuting, upgrades and general upkeep. For instance, if the new house lies considerably further away from your job than your previous apartment, will these extra miles cut into your gas budget? Will the combined expenses from the utility bills be more than you’re able to budget?
By implementing a few smart house-hunting tips, you can find the first home of your dreams without hurting your wallet.