Buying a new home can be a thrilling roller-coaster ride for everyone, but as a first-time home buyer, the ups and downs of the whole process can be a bit intimidating.
Buying that first home is a slice of the American dream, yet it presents a whole new set of responsibilities that as renters we can sometimes take advantage of. Being a home-owner means being responsible for paying the taxes, affording repairs when the dishwasher stops working, or even realizing that new carpet is needed after the basement floods. It’s difficult to imagine exactly what to expect when you haven’t had to be concerned about all of that in the past.
Before all the excitement begins, and the unforeseen “Chance” card is pulled, there are a few things that a first-time home buyer should consider. First, get qualified. Getting qualified for a home loan means you know how much home you can afford. Before even speaking to a mortgage lender, consider how much you are comfortable spending upfront and monthly. Having a realistic idea of what you can afford when it comes to monthly payments and what you have available for a down payment will ease the initial home-buying process. Secondly, figure out what you have available for that down payment that won’t send you into a stress-induced coma. While most can realistically agree on what is affordable in terms of a monthly payment, finding an extra $10,000 laying around for a down payment is quite another story. It does take a little effort to scrap up enough money, but thinking ahead is the first step. If you know that in a year or two you would like to be able to buy your first home, starting putting a portion of your paycheck each week into a separate account that is only for your down payment. Think about it, $500 a month, which is roughly $125 a week, can save you about $6,000 in one year. In two-year’s time, you will have a nice sized down payment. Create a schedule that works best for your financial situation and stick to it!
Lastly, check your credit! Your credit score is one of the most important factors in qualifying for a loan. Today, credit score requirements are more strenuous than have been in the past. Consider the amount of credit you’re using compared to your available credit limit, which can oftentimes sink your total credit score. If you are spending more on credit than you actually need, it’s time to begin thinking about what you can live without. Typically, credit scores range from 300-850; the higher your score, the more financial options that are available. However, don’t get discouraged if yours is on the low end, there are many programs out there than can assist first-time home buyers. The best bet is to begin thinking about your finances a year or so in advance and begin talking to a mortgage lender who can help you find the best program to fit your needs.
Emily Schmidt is a Sibcy Cline REALTOR® from Beavercreek, Ohio. She has helped clients in both the Dayton and Cincinnati areas find their dream home and sell their current property. Emily can be reached by phone at 937-409-6337 | [email protected] | Twitter | Facebook
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