Are you a first-time homebuyer? If so, you are not alone. Many people across the world are preparing to buy their first home. We will try to relieve your stress by providing tips on how to prepare for one of the biggest purchases in your life. Below is a list of five ways that first-time homebuyers can prepare to buy a home.
1. Look at your credit score
Do not begin your housing search until you take a look at your credit score. It might seem like just a number, but it can impact your life decisions greatly. Mortgage lenders will check out your credit score to determine if you can buy a home and how much the bank will charge you.
The goal is to make sure you have a high credit score because the higher the number, the lower your interest rate will be. There are several sites online where you can check your credit score easily and quickly. Keep in mind that your credit score is always changing and never stays the same.
2. Fix any negative information on your credit report
If you checked your credit report and see anything negative, you should start working on fixing them before finding a mortgage lender. You can contact the credit bureau to correct any information or try to find a way to pay off any collections.
Mortgage lenders are looking for good credit scores because it shows them that you are good at handling your bills on time and do not owe a lot of debt. If you decide not to fix the negative information on your credit report, you most likely will not get the loan that you had hoped for.
3. Determine how much money you can spend on a home
It is extremely important to determine how much money you can afford when it comes to purchasing a home. You may see a house that you really like, but it would be a tease if you could not afford it. Therefore, it is best to figure out how much money you can spend on a home before looking.
You can meet with a mortgage lender or use calculators on real estate websites that will calculate your monthly mortgage payment based on your down payment, the type of mortgage, and the interest rate. If you do not have the time to determine this information yourself, a mortgage lender will happily assist you throughout the process. They will look around for the best rates and programs to determine the best mortgage for you.
4. Begin saving for a down payment on a house
Once you have decided to buy a home, you should begin saving for a down payment. You can pay down small down payments, but 20 percent will get you the best rates when it comes to real estate. The average house currently costs around $300,000, which means a 20 percent down payment of this amount would be $60,000. If you would like to put down 20 percent, you should begin saving as soon as possible even if that means putting back a few hundred every month.
5. Start browsing houses and deciding what you want in a home
Find a real estate agent that will start sending and showing you homes to browse. This will help you determine what you are looking for in your dream home. Try not to be too picky when deciding what key elements of a house are necessary and which ones are negotiable. To give you ideas, look at school districts, yard sizes, the number of bedrooms and bathrooms, the heating and air conditioning system, and more.
You may even want to make a list and divide it into sections, such as necessary features, negotiable features, and dream features. Some of the features you would want in a house can be added later. It is also important to remember that there is not one house that will match everything on your list, but you will likely find something close.