Lisa M. Corr's Blog
If you want to purchase a home, it pays to establish a homebuying budget. By doing so, you can enter the housing market with a budget in hand and narrow your search for your dream house.
Now, let's take a look at three best practices to help you create a homebuying budget.
1. Look at Your Finances
Your finances will play a major role in your ability to purchase a home. Thus, you should evaluate your current financial situation closely so you can map out an effective homebuying journey.
Request a copy of your credit report – you'll be glad you did. You are eligible for a free copy of your credit report from each of the three reporting bureaus (Equifax, Experian and TransUnion) annually. Take advantage of this complimentary perk, and you can gain deep insights into your outstanding debt.
If you have outstanding debt, try to pay this down as much as possible. That way, you can boost your credit score, which ultimately will help you improve your chances to acquire your ideal residence.
2. Meet with Banks and Credit Unions
When it comes to buying a home, meeting with banks and credit unions usually is a great idea. That way, you can learn about your home loan options and get pre-approved for a mortgage.
Apply for a mortgage from several banks and credit unions. Then, you can receive various mortgage quotes and select one that suits you perfectly.
Also, don't hesitate to ask plenty of questions during a lender consultation. Banks and credit unions employ friendly, knowledgeable mortgage professionals – all of whom are happy to help you make an informed mortgage decision. Therefore, if you're unsure about whether to proceed with a 15- or 30-year mortgage or can't decide between an adjustable- or fixed-rate mortgage, you can ask these mortgage professionals for expert advice.
3. Consult with a Real Estate Agent
A homebuying budget is tricky to establish on your own, especially if you are entering the real estate market for the first time. Fortunately, a real estate agent can help you plan ahead for all stages of the homebuying cycle.
During a real estate agent consultation, a housing market professional will learn about your homebuying goals. Next, this professional will help you establish realistic homebuying expectations and ensure you can discover a great house at a budget-friendly price.
Of course, let's not forget about the world-class support that a real estate agent provides after you kick off a home search, either.
A real estate agent will set up home showings, keep you informed about open houses and offer homebuying recommendations and suggestions. Perhaps best of all, a real estate agent can negotiate with a seller's agent on your behalf to help you get the best price on a house.
Ready to begin your search for your dream home? Use the aforementioned best practices, and you can craft a homebuying budget and start your homebuying journey.
There are important points that first time homeowners should consider. These points can help homeowners avoid future head and wallet aches. Other advantages embedded in these important points include better understanding of homeowners association rules, house inspection preparation and mortgage repayment expectations.
Don't let homeowner excitement force you into a bad house buying deal
You'd be hard pressed to find an experience that is more exciting or stressful as buying a house. First time homeowners are people who are generally hopeful and ready to go after their dreams. Their backgrounds are broad, diverse. Hopefulness aside, buying a home is a large step. It's the largest purchase that many people make.
If house shoppers aren't careful, they could sign a lousy mortgage contract. The below points are great to consider before buying a house:
- Credit history - Access your credit history.Check your credit report with all three major credit agencies. The major agencies are Experian, TransUnion and Equifax. Don't stop there. Consider how ready you are to take on more debt.
- Check the neighborhood - Visit the neighborhood during the day and night. Pay attention to the condition of painting and siding on houses, sidewalks, driveways, community facilities, schools and lawns.
- Speak with neighbors - While you're walking around the neighborhood, introduce yourself to neighbors. Ask them what they like best and least about the neighborhood.
- Think about how long you plan on living in your new home - Because lenders build mortgages that require you to pay most of the interest during the early part of your home loan, you could save if you stay at your new home longer than five years. Otherwise, it might be more cost efficient to rent.
- Familiarize yourself with homeowners association(HOA) fees - Ask your real estate agent what the monthly homeowners association fees are. Go with a HOA that is well funded. Also, choose a home that is managed by a HOA that invests part of fees it receives toward savings.
More ways that first time homeowners can get ahead during the house buying process
- Understand HOA rules - Some states set HOA rules. Other states do not. Check with your state to see if they have regulations that HOAs must abide by. If the state doesn't have HOA regulations,get a copy of the HOA rules. Take your time reviewing the rules. If you are adamantly against a HOA rule, buying a home in a different neighborhood might be the right decision.
- Calculate your monthly mortgage payments - Do this before you agree to move forward with buying a home. Don't just factor in the principal. Factor in interest, closing costs and inspection fees.
- Shop for a fixer upper - Compare the costs of buying a fixer upper versus buying a key-ready house. If you buy a fixer upper,make sure that you can afford to cover repairs. Should you or someone you know be a handy person, buying a fixer upper as first time homeowners could prove smart.
- Consider other expenses - As first time homeowners, you may need to buy furniture. Think about these costs before you become first time homeowners.
- Buy a large enough house - Get a house that's large enough to accommodate your family, now and several years into the future.