Ready to Buy Your First Home? Here’s How to Prepare.
Everyone has been asking if you are going to give up apartment living and finally buy a home, but taking the leap can be scary. What if it’s not the right move for you? What if you can’t afford what the bank thinks you can? What if you pick a money pit and it drains your bank account? Relax - there are ways to prepare so you can be sure your bank account is ready to handle being a homeowner.
Look at what you spend on rent now.
If your potential mortgage payment is similar to what you pay in rent each month right now, you are probably not off target in looking to buy. There are homes out there that you could probably own for about the price you pay in rent.
Look at your budget.
Adjusting your budget is wise whether you buy a home now or not. Just about everyone has had a moment when they wonder how they managed to spend a large chunk of their monthly income, with seemingly little to show for it. To be certain what you are spending money on and identify ways to limit unnecessary spending, you need to sit down and make a list of what you are buying. Chances are, you could easily have a few hundred more in your monthly budget if you eliminate small purchases that add up quickly. Find substitutes for things like lunch out every day, coffee at the drive-thru window and drinks with friends every weekend. Instead plan to invite friends over to your new house for drinks, pack lunches, and brew coffee at home to take to work with you.
Don’t go for the maximum loan offer.
Just because your lender says you could borrow up to a certain amount does not mean you should. If you choose a loan slightly below the maximum amount, you have wiggle room in your budget for any unexpected repairs or emergencies.
Get a home inspection.
Just about every buyer does a home inspection, and it really limits the chances of buying a money pit. Have a professional inspector examine all major parts of the home to give you a report on any major issues as well as potential repairs needed down the road. This way you’ll know ahead of time what you are getting yourself into.
With a little planning and inspecting your finances, you can get ready to speak to a Realtor about buying your first home.