Are you ready to buy your first home but wondering whether you can afford it or even where to start? There’s no question that buying a home is a big step, but it is manageable if you break it down into smaller steps.
Organize Your Finances
There are a lot of upfront costs involved in buying and maintaining a home, so even if you’ve saved up toward a down payment, you should put off purchasing a house until you have several months of emergency savings set aside. You may want to look into ways to reduce or at least simplify your debt before moving forward as well. For example, if you have several student loans that have different rates and term lengths, you might want to consider student loan consolidation. You can do this with either private or federal student loans. For the former, you may be able to consolidate your loans through a private lender and get lower interest rates. For the latter, the U.S. Department of Education offers Direct Consolidation Loans.
Consider Your Needs
Keep in mind that there are alternatives to single-family homes that might suit you better. For example, do you want to buy a condo, a duplex or a townhouse? You should also be sure you understand the difference between elements or features of the home you can change and those you can’t. Redoing a home’s layout could be too costly, but ugly carpet, hideous wallpaper and outdated fixtures can all be easily replaced, however undesirable they may make a house look at first glance. Remember as well that it is not just about the house itself. The yard, the neighborhood and, if you have children, nearby schools should all be taken into account as well.
Consider Your Means
A mortgage pre-approval can give you a realistic idea of what you have to spend on a house, but be careful. There might be situations in which a bank is willing to lend you more than you really should pay. Even if the house does not need any expensive improvements, in addition to the mortgage, you will need to pay property taxes and get homeowners insurance. If there is a homeowner’s association, you will need to pay fees to them. Resist the temptation to buy more house than you can afford. Beware of fixer-uppers unless you already have a lot of home do-it-yourself experience or a lot of money and patience. These can be fun family projects, or they can turn into money-sucking nightmares.
When looking for down payment assistance, it’s important to research and compare programs offered by different organizations and lenders, and to ensure that you meet the eligibility criteria before applying. Check this guide to know more about down payment assistance programs.
Get Help
Look around your area. Some communities offer grants, education and other resources for first-time buyers. Some states offer help with down payments and even renovations. Some programs for first-time buyers require very low down payments or perhaps no down payment at all. A good real estate agent can be invaluable. In addition to helping you locate the kind of home you want; they can assist you with getting a loan, paperwork, making an offer and more. Talk to friends and family members to get a good recommendation.