Congratulations on your first home purchase. This is a time filled with excitement and joy. As you get ready to move into the new chapter of your life, there are some things that you want to keep in mind as you search for the perfect home, purchase one, and then move into it.
This time can be just as overwhelming as it is joyful, especially as you look around at all the available homes, apply for a loan, and start the waiting process. Below, we will talk about some of the things, you, as a first-time home buyer, need to know.
What should I absolutely know as a first-time home buyer?
One of the first things you should know is that you need to make sure that you are in tune with your credit score, know it like the back of your hand, and eliminate any debt that you have. Having debt can be the difference between owning or renting a home to live in.
When lenders look at you, they want to know that your debt-to-income ratio is within the set limit and that you have a good credit score. Anything less than that and you become a red flag and may have a harder time securing a home loan.
Once you have your credit and debt in check, you then need to start to look for a lender. Remember, not all lenders are created equal, so you want to make sure you do your research, and you look for one that meets your needs and has a good reputation within the community.
What size down payment do I need?
It depends. You definitely want to have a down payment saved up for when you purchase a home because you will need it. However, the amount you need will vary based on several factors. For example, you may be required to put 10 percent down if you have a lower credit score while if you have a good credit score, you may only have to put 2.5 percent down.
While there is no set number to have saved up, do make sure you save something close to the 5 to 10 percent range of the average home price you are looking for. Best case, your down payment is less, and you have a little savings account for yourself in the end.
How much home can I afford?
That is dependent on your income, credit, and the lender. Before you start to look at homes for sale, you want to speak with a lender and find out how much you are pre-approved for. This way, you know how much you can reasonably afford, and you do not go over this price.
Remember, depending on where you choose to live, your pre-approved amount may get you the home of your dreams with all the storage area that you are looking for or it may not. This means you should do your market research and know the prices of homes before you start to shop.
On a side note, you do not want to start shopping for a home and fall in love with one that you cannot afford, so do make sure to go through the pre-approval process.
Do I need a home inspection?
It doesn’t hurt. While the home may have already had one performed by the current owner, it doesn’t hurt to pay for an independent inspection. This way, you know what you are getting yourself into. The average cost for a home inspection is anywhere from $300 to $500.
Waiving a home inspection can mean that you inherit many damages to the home that are not visible at the time of purchase and this could mean thousands of dollars later.
Buying a Home is Exciting but Make Sure You Have Space
Buying your first home is exciting but you definitely want to make sure that you have a lot of storage space within it. If not, you may find yourself wishing you chose one with space.