Buying a home is like completing a project. That means you’ll need all the details about each step you should take so you’ll know what to expect and can be prepared for the process. If you’re buying a home for the first time, here are some crucial points to keep in mind so you can prepare your finances, shop for a home in the right area(s), and choose the mortgage that works best for you.
Start Saving as Soon as You Can
When you’re saving up to buy a home, you should think about the down payment. The amount of the down payment depends on the lender and mortgage you select. Some loans are designed for first-time homebuyers will a high credit score, which means your down payment will be as low as 3%. However, even a small percentage can be difficult to save, since it is usually several thousand dollars. You can use an online down payment calculator to determine your financial goal and then set up the automatic transfer feature with your bank account so that a certain amount will go from your checking to your savings each month until you have the amount you need.
You’ll also need to consider the closing costs when purchasing a home. Closing costs are the expenses you’ll pay for mortgage finalization, which can be up to 5% of the total loan amount. You can also request that the seller pay part of the closing costs, and shopping around can help you save money on a home inspection before you move in.
Don’t forget that there are additional move-in expenses to factor into your budget as well. You need some cash for furniture and minor house upgrades and repairs so be sure to account for this in your budget.
Figure Out How Much Home You Can Afford
You’ll need to figure out how much you can afford to spend on a home before you start looking at houses. You can use an affordability calculator to help you determine a price range based on the down payment, your debt, your income, your credit score, and the neighborhood you want to live in. If you’re thinking of living in or near the Edmonton area, contact home builders in Edmonton once you know the type of home you’re looking for.
Check (and Fix) Your Credit
Your credit score is used to determine what type of mortgage you qualify for and what your interest rate will be. You can boost your score by obtaining a copy of your credit report from all three bureaus (TransUnion, Experian, and Equifax) so you can look through all the items on the report and know which debts to pay and which to dispute. It’s also best to keep your credit card balance as low as you can and to pay your credit card bill, as well as your other bills, on time. Once you start preparing to shop for a home, don’t close any of your current credit cards. If you close a card, you won’t have as much credit to use and this can actually lower your credit score. Make sure you track your credit score throughout the home buying process so you’ll be notified of any changes right away.
Research Mortgage Options
There are several mortgages available with different requirements. It’s important to look at all your options based on your eligibility and the down payment you can afford. If you don’t want a loan that is guaranteed by the government, try a conventional mortgage. You may even be able to find mortgages just for first-time buyers. Or, you can opt for Federal Housing Administration or FHA loans which allow for down payments that start at 3.5%. If you’re buying a home in a rural area, take a look at loans guaranteed by the US Department of Agriculture. If you’re a former or current military service member, the Department of Veteran Affairs offers VA offers mortgages that don’t require a down payment. You can also choose whether a 30- or 15-year mortgage is best for you based on your budget and long-term goals.
Buying a home is likely one of the most significant milestones you’ll reach in your life. That’s why it’s important to know how to complete the home purchasing process and to prepare yourself for maintaining your home for years to come. Your home is likely the place where significant memories will be created as you raise and family and achieve more personal and professional goals. It’s essential that you know the steps to take if you’re becoming a homeowner for the first time so you can get into the home of your dreams as soon as possible.