Buying a home, especially for the first time, can be an exciting milestone. At the same time, it can be an overwhelming process. Our first time homebuyer’s guide can help point you in the right direction if you’re unsure of where to begin.
Save up for a down payment
Once you make the decision to buy your first home, it’s never too soon to begin saving for a down payment. The more you can save, the better—not only will this increase your chances of being approved for a mortgage, but it will lower your mortgage payments. And by putting down a larger down payment (at least 20 percent), you will avoid the extra monthly expense of mortgage insurance. Also, don’t forget about closing costs.
Determine how much you can afford
Be realistic about how much you can afford to pay each month for your new home. This not only includes your mortgage payment, but taxes, insurance, and other costs. It’s also important to realize that a large home will cost more to maintain, heat during the winter, cool during the summer, and so on. Once you determine how much you can comfortably afford each month, you’ll be able to narrow down a price range for homes.
Apply for a mortgage
Unless you have enough money saved up to purchase a home in full for cash, you will need to apply for a mortgage. Some people choose to find a home they like first before applying for a mortgage. However, doing it the other way around may save you some time. By applying for a mortgage first, you’ll know just how much you’re approved for ahead of time before beginning your house hunting. If you know your credit isn’t that good, take steps as soon as possible to begin repairing it. You may also want to find someone who is willing to co-sign for you if you think you won’t be able to get the mortgage on your own.
Narrow down your search
After you’ve figured out how much home you can afford and you’re approved for your home loan, the fun part begins. Narrow down your search by determining what area is better for you and what type of housing you want, such as a house, condo, or townhome. Think long-term, because when it’s time to sell (or rent), it may not be easy—therefore, you want something that you know you’ll be happy in for a long time. You may be faced with the decision of a smaller home in a more centralized location, or a bigger home that is further away. It’s important to figure out what matters more to you, and make this decision carefully. You can then narrow down your search even further by determining which features you’d like in a home, such as having a garage or two stories. You’ll also want to decide if you want a fixer-upper or if you’d prefer to pay extra for a home that is already up to date. Finally, there is also the decision of buying an existing home, or hiring a builder and developer and building a customized home. One great way to find the home that is perfect for you is by working with a real estate agent in your area.
Remember, this is your first home. For many people, a first home is a starter home and may not be your dream home. The important thing is that you pick a home you’re happy with and one that you can afford. Congratulations on purchasing your first home!
Are you thinking about buying your first home? Whether you need cash now for your down payment, to help with the closing costs, or to repair your credit, Peachtree Financial Solutions may be able to help. With our annuity purchase program, you can sell some or all of your future annuity payments for cash now. For more information on the annuity purchase program we offer, contact us today.
Nothing above is meant to provide financial or tax advice. You should meet with appropriate professionals for such services.