Buying a home for the first time can be exciting, but it can be nerve-racking, too. You must contact many people and property sellers to find a suitable home. Don’t be an impulsive buyer! Before you buy a house for yourself and your family, plenty of questions need to be answered. Meeting a few property sellers and relying on one after clearing all doubts can help ease the process.
Here are a few tips for homebuyers to tackle the home-buying process:
Build an Emergency Fund and Pay off All Debts
Buying a home is way more expensive than renting one. When you own a house, you are responsible for maintenance and the upkeep cost of it. And those can add up fast! So make sure you have cleared all your debts and built an emergency fund of three to six months of expenses.
When you get into your home with an emergency fund and no payments besides the mortgage, you can easily pay for huge expenses that suddenly come your way. This will help you settle fast and stress-free.
Even if you have an emergency fund, be mindful of your budget when decorating and buying new furniture.
Be Mindful of Your Budget
Check your monthly budget to determine how much of a house you can afford before you get emotionally attached to a beautiful home. Your house’s monthly housing costs should not exceed 25% of your monthly take-home pay.
You must leave room in your budget to compensate for expenses like furniture, electronic devices, and other appliances.
Save a Down Payment
Save for a down payment of 15% or more if saving to pay money for a house’s total price isn’t feasible for you. This way, you will not have to pay for private mortgage insurance.
If a down payment of 15% seems out of your reach, you can opt for first-time homebuyer programs that offer single-digit down payments. Here are some low-to-no down payment debt options to avoid:
- FHA Loans: You will have to pay a mortgage insurance premium, including thousands of dollars, for the loan’s life.
- Adjustable-Rate Mortgages: They ask the lender to adjust the rate to transfer the risk of increasing interest rates to you.
- VA Loans: This type of loan allows buyers to buy with no down payment, but if the real estate market shifts, you can easily owe more than your home’s market value. They charge a higher rate of interest compared to conventional loans.
Save For Closing Cost
You will need to pay for the closing cost and the down payment. Your property seller will guide you regarding the closing cost. These fees pay for things mentioned below in the home-buying process:
- Credit report
- Attorney
- Appraisal
- Homeowner’s Insurance
- Home inspection
