Buying your first home is one of the most exciting milestones of a person’s life. It’s a symbol of all your hard work, so naturally you want to make sure the house meets your standards. However, the process of purchasing a home can be very tedious. In fact, it’s possible to spend days or even weeks looking for a suitable house.
What’s more is that the real estate market is very fickle, so you must be diligent. But that doesn’t mean you should struggle during your search. That’s why we’ve created this in-depth guide for first-time homebuyers. Here’s everything you need to know when it comes to buying a house for the first time.
Plan Your Search
Searching for a house can happen whenever you choose. However, there are certain periods of time where your search can go smoother. Ideally, you’ll want to search around the fall and winter seasons. You may be wondering why you would want to wait until over half the year to look through the market. This is because these two seasons are when the real estate market has considerably lowered. Delaying your search gives you plenty of time and opportunity to tackle your other priorities.
Make Sure Your Credit is Up to Par
Your credit has a profound effect on many things and purchasing a house is one of them. To be more specific, credit dictates whether you’re eligible for a mortgage. Mortgages are loans that help homebuyers afford the house they’re looking to buy. Aside from a decent enough credit score, you must also have a strong income, low debt-to-income ratio, and documentation of your current assets. The latter is going to be used as a form of collateral.
Lenders want to be sure that you can overcome a financial crisis, or avoid one altogether, based off your financial history, before giving you a loan as large as a mortgage. Because of the amount of money needed to purchase a house, the lender will require security, which is why they ask for your assets. If you don’t pay what’s owed, they possess the right to take the collateral and even the house.
Crunch the Numbers
Since purchasing your first house is a massive financial decision, you’re most likely feeling a whole slew of emotions right now. You’re excited, overwhelmed, pressured and nervous at the same time. However, it’s important to keep a calm head throughout all the process. You’ll want to keep things simple, and you can start by doing a few calculations. There are different home affordability calculators online you can use to get a better idea of what you’ll be spending.
You also can find a detailed guide that can show you how to effectively crunch the numbers and see what kind of house you can afford and understanding the (28/36 rule) is critical if you’re looking to save money. The 28/36 rule works like this: you spend 28 percent or less of your gross income toward your mortgage payments. The next portion of this rule is that you spend 36 percent or less on your debt payments. This is how you ensure you always have a balance between mortgage payments.
Find a House Within Your Budget
As you search through the market for your first house, it’s easy to look at options that are well beyond your means. The key to finding the perfect house is to look for one that’s within your budget. You don’t want anything too expensive, but you also don’t want anything too cheap either. One of the best house hunting tips is to not expect 100 percent perfection.
There’s bound to be something about the house that doesn’t connect with you, and that’s perfectly fine. Don’t let a negative or two deter you from buying it. The only time you should decline an offer is if the house has too many problems, like foundation issues and water damage. Another important tip we need to share is that you should look at the history of the house you’re interested in. That way, you’ll have a prime bargaining chip when it comes to negotiating with the real estate agent.