Buying a home is a significant undertaking and can be both scary and exciting. But, just as with any other major project, success depends on careful planning, research, and attention to detail along the way.
Start Saving
Start saving several years before you hope to buy. The down payment required depends on the type of loan you take; some require as little as 3.5 percent, but others require more. In all cases, the more you pay down, the more likely you’ll be to obtain a favorable mortgage and the lower your monthly payment. A down payment calculator can help you set a goal.
You’ll also need to save money to cover closing costs, which can be between 2 percent and 5 percent of the loan amount. Then, you’ll need money for moving out of your current rental and initial repairs and decorating. And, you’ll still want to keep six months of expenses in reserve after closing in case of illness or job layoff.
Decide What You Can Afford
A general rule of thumb is to keep your housing costs at about 30 percent of your gross income. Many lenders will allow you to qualify if your total debts, including the mortgage, are less than 43 percent of your income if your credit scores are good. However, if you pay this much, you may feel house poor for a few years. Use estimating tools to help you determine what you can afford comfortably.
Check and Strengthen Your Credit
The better your credit score, the better interest rate you’ll be able to obtain on your mortgage. Even a slight percentage difference in the interest rate can make a big difference in your monthly payment. So check your credit and take steps to improve it.
Qualify for a Mortgage
Prequalify for a mortgage before house shopping. Many sellers will not take your offer seriously if you don’t have a written approval letter. If you shop before getting the preapproval, you may find a home you love only to have your offer rejected.
Talk to at least three potential mortgage lenders to get the best deal possible regarding rates and customer service. Consider both conventional and government-backed loans such as FHA, VHDA, and VA when looking at lenders. Also, research first-time buyer assistance programs in your area to see if you qualify.
Choose a real estate agent.
You want a real estate agent who will scour listings for houses that meet your needs. You also want one who will stick with you through home inspections and closing procedures. Ask for recommendations from friends, family, and coworkers. Interview several and specifically ask about their experience with first-time home buyers.
Consider Homes Carefully
Weigh the pros and cons of different types of housing. For example, condos and townhomes may be less expensive, but they will be less private. Consider your housing priorities; for example, is a large master suite the most important, or do you value the size of the yard. If you plan to stay long-term, consider whether it will meet your needs 10, 15, or 20 years from now.
Also, prioritize neighborhood amenities. For example, are recreational amenities within the neighborhood essential, or is commuting time the driving factor? Research each potential neighborhood to see how well it fits your priorities.
Select a Mover
When it’s time to choose a household moving company, talk to friends, family, and your realtor to get referrals for reputable, established companies that have years of experience and excellent reviews. Get at least three in-home survey quotes for the moves and make sure they are licensed and insured.
When you’re ready for your next move, contact us. We can provide you with a stress-free full-service move, so you can start enjoying your new home quickly!