No matter how you look at it, a house will always be a major purchase. Perhaps, it is one of the major purchases in your entire lifetime. That’s why industry experts always say to proceed with caution. Below is a checklist of the most important aspects of buying a home. First-time homebuyers will mostly benefit from this checklist.
- Pay down debt
Importantly, for pre-approval, you must have a good credit score. This is the necessary first step and not hunting for the house that you like. With a poor credit rating, it would be difficult for you to find a mortgage loan at the best interest rate. What’s worse, you may not obtain a loan at all. So, start paying your outstanding loans now.
- Save more money
Experts suggest that you learn about the purchase price of the property that you want. Afterward, check the money on your bank account. It should be at least 20% of the property’s purchase price. This is the down payment. Also, the highest down payment that you can pay means the lowest monthly amortization possible. If your money in the bank is nowhere near that percentage, you should start building your cash now.
- Adjust the budget
Aside from your money in the bank, be reminded that you are embarking on a month-after-month and year-after-year expenses. Think about how much spending you can shoulder on a monthly basis. There will be more expenses once you decide to buy a house not just the amortization and interest, but also property taxes, association fees, higher utility bills, etc. These are just the direct costs of owning a house thus, there will be more. You must know your monthly budget religiously and adjust accordingly, so that when you move in into your new home, you won’t be shocked by the surcharge of expenses.
- Consider the tenure
Would-be homeowners can choose their preferred length of the housing loan. The shorter-term the loan, the lower the interest rate would be and vice versa. The only problem is not a lot of people can actually swing a higher amount of monthly repayment. Bills easily pile up thus, making sure that you are 100% confident with the monthly amortization is a must.
- Gather paperwork
Start gathering the necessary documents including income tax records, proof of income, utility bills under your name and other such documents that the developer or bank will require in the future. You should also prepare credit card, bank and loan statements. Most importantly, prepare the necessary identifications. If you start doing the paperwork now, the real estate transaction will be much easier and quicker eventually.
- Decide for a house
After pre-approval, you may start narrowing down your choices. Do you want a bungalow-type or a two-story house? Do you want a house with a huge front yard or backyard? How many bedrooms? How many bathrooms? Would you want your new house to have a pool? With this, try listing down your would-be house’s must-haves and look for a house with all these. These are your non-negotiables, but be reasonable about this. Put simply, you should strive to have a solid idea about what home you really want and work from there.
- Scout out for neighborhoods
Now is the perfect time to look for neighborhoods where you want to live. Remember that the location is one of the most important factors to look at, if not the most important. It isn’t enough that you want to live in the city. You must ask yourself where in particular. Neighborhoods vary, in general, so make sure that your money will go into the right neighborhood. Nevertheless, don’t let yourself experience a massive letdown by avoiding those neighborhoods that you know you cannot afford.
- Find an agent
Enlisting the help of a real estate broker is not a necessity, you may say. However, a broker can do a lot of things that you cannot. For one, he or she can help you in making the most of the home search process. The agent can find available homes that match your needs and preferences. The agent can also negotiate the price for you should you find the perfect fit. He or she can also share the inside scoop in the real estate industry. Capitalize on these things so you can get the best deal there is.
Evidently, buying a house is foundational there are so many ground works to do before you experience the fun part which is house hunting. For a first timer like you, it won’t hurt to do all the things listed above. In fact, you’d end thanking yourself for doing all these.